Chennai-based cloud enterprise software product firm Zoho, which gets 95% of the revenues from overseas markets, has started to focus on the Indian market. The company has grown over 30% annually without any investment from private equity or loans from banks. In an interview with FE’s Anand J, founder and CEO of Zoho Sridhar Vembu said he is confident of facing the competition from Salesforce and Microsoft.
Excerpts:
What were the reasons for Zoho setting up a single software development centre in Chennai?
Software development is low tech and closer to a lot of craft whereby you are shaping each product by hand. It needs a lot of human communication, coordination and culture. Organisations ship their internal culture as software, which is true of Zoho. That is why I believe software development across various centres is not advisable and we centered ourselves in one city — Chennai. Most of the marketing is done remotely even now.
Zoho has preferred online rather than offline marketing. Is that slowly changing?
Clearly, we have gone to offline medium recently and you will see more of that as we complement the brand reach. Deploying more sales people on the ground is something we will do selectively. We offer customer support but don’t want to pester and call them all the time. We have Zoho billboards at 23 US airports now as well as on the major highways of Silicon Valley and San Francisco. So far, our customer base has remained in the US but we are branching off here and you will see more such outreach here as well.
The Zoholics event was held for the first time in India at Bangalore. Reasons?
The Zoholics events in the US or Japan are about products, but here in India, there is a lot of curiosity about the company itself. The market needs to develop and mature and we are investing in evangelism here. On a percentage basis, we are not spending much. In India, we are investing money with the Zoho.in project, which is a cloud suite of products for small enterprises offered at low cost.
What is the potential of Indian market for Zoho given that 95% of your revenues come from overseas?
There is a belief that the global financial crisis is not over yet. We see bigger problems in Japan and Europe, and the global system is unstable and unhealthy. I don’t believe that the current trading system will survive very long and we just don’t know what changes are going to happen. India has a good demography and if we don’t get too financialised, we will do well. Zoho is a strong house, but we are living in an earthquake zone, which the global economy is.
What is the kind of growth Zoho seeing now?
We are growing at more than 30% every year. We plan only for next six months when it comes to hiring. We grow our team according to our sales. We are hiring in Texas (US) and in India. Our sales team is around 15-20% of our workforce while around 50% are in product development. Another 15% is on product support, mostly delivered through various online channels. We have enough internal accruals to deal with any spurt in demand from India and we are a zero-debt company.
How is Zoho facing up to competition?
We gained a good name and recognition as one of the earliest players in the cloud industry. The traditional Microsoft monopoly in the enterprise segment is being broken now. We are efficient, fast and economical and we will get our fair share. The cloud will expand 10 times in next 10 years and we will be happy to be 10% of Microsoft’s size.
Who are your biggest competitors now?
The biggest would be Salesforce and Microsoft. Salesforce is a sales and marketing company with software attached. They papered over the lack of innovation by acquiring companies. We build products. We will see which strategy will succeed in the long term.