A visit to Zoho Corp headquarters in Chennai outskirts will sweep you over. What strikes one first is the high-tech security system—Zoho’s own— manned by a handful in a 12-story tower. But more surprises, and learning, are in store.
L&T was desperate to sell its IT SEZ that bombed. Zoho Corp bought this tower standing tall on a 27-acre plot, apparently at a bargain, and moved into it about six months back. Not a bad idea for other companies and SEZ/mall owners to follow.
A mid-sized software company, Zoho Corp has what it calls a ‘Zoho University’, which hires 12th class pass-outs and train them on the job with a decent stipend. Candidates are chosen after a test and interview, but their marks or grades are never looked at. “It gets us a talent pool that is ignored by the industry,” says Sridhar Vembu, CEO & founder, Zoho Corp, adding, “Software business is a war for talent. Everybody is fighting for the limited number of talent.” About 15% Zoho engineers, out of 2,500-plus, is hired this way. “They learn on the job, and learning is life-long.”
Sridhar disapproves of government getting into skills development. “It is the private sector’s job. How will the government know what function to train for?” Catching students early for on-the-job training can be transformative. What is the point in studying 1,000-plus pages of accountancy over three years, if all one has to do for life is keeping petty cash book? Or, wasting five years in engineering colleges when the job can be easily learnt on-the-job from day one?
Ban on meetings
Zoho follows a non-hierarchical, informal organisational structure, and formal meetings are a rarity. If there is a need to discuss, team members would stand or sit together somewhere and talk. That’s it. Sridhar says companies waste a lot of time in meetings as “they overly formalise or are rigidly process-driven. If the business is very process-driven or rule-driven, then productivity suffers.” Greater productivity per person helps Zoho cut costs.
“We keep costs down by being more efficient, developing software faster and with a smaller team. This depends on what technology is used and what kind of team culture you have”, says Sridhar. Zoho, he says, has a broader product folio than many big names, thanks to a work culture that keeps employees happy and the attrition rate low at 5-6%.
“To retain people, you have to treat them well,” says Sridhar. How well he treats his people?
Food is free. Each floor has a coffee shop and two floors have cafeteria. Salaries are good. There is hardly any boss strutting around. Everyone is given tasks and milestones.(the whole organisation, across six location across the world, runs on Zoho software) that can be tracked. Even if the CEO walks around the place, nobody bothers to acknowledge him, unless he stops at their desk to talk. Simplicity is also part of the culture. The CEO himself wears sandals and faded casuals!
Productivity & GDP
Sridhar says so far Indian SMEs didn’t have to bother about productivity since labour was cheap. But that’s changing now. “So SMEs now have to apply technology to the problem. Indian SMEs have to be more tech-savvy. Indian labour productivity is still low and technology is the key to raising that. SMEs tend to be more hierarchical .They have to become more collegial. And people are to be treated with respect.” When more and more Indian SMEs come online, that will raise the country’s productivity, and in turn, its GDP.
No investors, please
A reason Zoho keeps costs down is that it has no outside investors. And it will never go public as well. Having no outside investors gives it the freedom to “do all the crazy things we do here”. Like Zoho is now building a school in the campus for its staff. “An investor may say don’t build school, but give us more dividend ”In the last 17 years, Sridhar and his five partners reinvested whatever profit they made in the company. “Still, we enjoy a decent middle-class life”, he says.
The next big thing
In the next 10 years, nobody will use installed software. It will be mobile apps or cloud. Software-driven innovation is changing the business-scape. It’s no longer software helping a business, but software driving a business. Uber is a good example. It is no longer a software company. It now owns cars. So software is leading it to a new business. So we have an inverted or flipped business scenario now. A software-led revolution is happening in business. SMEs and traditional companies have to become software-enabled. They either have to master software or buy software to drive their business. Browsers are also getting powerful, with video and voice capabilities.
Zoho for SMEs
Basically, Zoho is in the process of perfecting a business operating system for small businesses. A simple operating system that takes care of all business functions—like sales, marketing, accounting, finance, HR, billing, correspondence, etc..Life blood of business, Sridhar says, is information—about market, employees and customers. Zoho helps SMEs manage such information. It also offers “business-class, secure” domains free for individuals and businesses. For a business of up to 10 staff, the domain is free, beyond that it currently charges Rs 50 per user a month.
Zoho claims it has over 60,000 business users of its products and over 50 million users worldwide.