Cloud software giant Zoho boss has a no lay-off policy in hard times

Despite ongoing market carnage, this tech CEO says employees at his global cloud software giant have nothing to worry about.

Zoho boss Sridhar Vembu attributes its low attrition rate to putting people first. Picture: Supplied

The chief executive of global cloud software giant Zoho has made a commitment to his 12,000-plus employees – no lay-offs.

Sridhar Vembu, who has led Zoho since its founding in 1996 and is estimated to be India’s 55th richest person, says that the fact Zoho is still privately owned means it isn’t subject to the same market convulsions that have forced public companies and smaller start-ups into widespread headcount reductions.

Speaking in an exclusive interview, Mr Vembu said Zoho, which offers an online office software suite along with other cloud-based collaboration and productivity products, said that he first made the pledge in 2020, at the start of the Covid pandemic.

“I said that whatever difficulties we go though, I said that we will have a no lay-off policy, and it actually helped us get through because our employees trust in this company, and they know that we have a long-term view,” Mr Vembu said.

“I’ve recently reiterated the same thing, where I said I know the news flow is not very good, the job market is good but many companies are laying off. But we will stick to our strategy, we want to hold on to our people long-term and invest in our talent pool long-term.

“So we will be the last company to lay-off staff, and if that happens probably the world is ending.”

The fact that after 26 years Zoho is still a privately owned company has allowed management to make bolder moves than it otherwise might have, Mr Vembu said.

“We don’t emphasise short-term profits and we don’t have to report to Wall Street every quarter. So I essentially ignore these quarterly fluctuations,” he said. “And if you have to spend some more money this quarter, because times are tough and we have to take care of our people, then we do that. And we were willing to let customers defer their subscriptions during that time, because we know it’s the right thing to do.

“During the ‘Great Resignation’ our attrition is one of the lowest in the world, not just in India, and that’s because of our long-term commitment to our employees and that we have stayed private.”

The executive added that he thinks share prices and start-up valuations will likely continue to fall, including in Australia, giving valuations previously were at unsustainable historical highs.

“Stock price fluctuations should not matter, but unfortunately the way a lot of the Western economies are run is that share prices have become the dominant objective of companies,” he said.

“I don’t agree with that philosophy, I think that it does a lot of damage to culture and to technology. I have often argued that the deindustrialisation of economies like the US, the UK and Australia is directly due to the extensive focus on finance at the expense of real industry.

“We need to go back to a focus on real industry and real capabilities, rather than a situation where the economy is selling finance.”