Zoho plans to set up small rural offices; says will avoid lay-offs at any cost amid Corona crisis

By: |
April 30, 2020 4:40 AM

SaaS players with strong balance sheet, ability to endure cost structure that are aligned and who are not out of control in their spend are the ones who will survive this.

Zoho will be a neutral observer in this consolidation, since it doesn’t want to go out and raise funds in this environment for any acquisition.Zoho will be a neutral observer in this consolidation, since it doesn’t want to go out and raise funds in this environment for any acquisition.

Amid looming concerns over the impact of Covid -19 on the information technology companies, Zoho Corporation, one of the major SaaS companies, on Wednesday unveiled plans for setting up a slew of small rural offices run by 20 to 30 people to enable around 70% of its workforce to continue working from home even after the lockdown is completely lifted.

Though the company has cancelled bonus for its employees and may implement a pay cut if required in future, it will avoid lay-offs at any cost, the company said. It maintained that SaaS (Software as a Service) industry will see the much-expected consolidation with the Covid-19 crisis and the economic recovery is going to be slower. Zoho is cutting back on its marketing spends and re-orienting products to suit the evolving marketplace.

Zoho Corporation CEO and co-founder Sridhar Vembu, an industry veteran, at a virtual press meet hosted in a village near Tenkasi in southern Tamil Nadu, said: “We are going to ask our employees to exercise judgment in coming to the office. May be only 30% of the people will be coming to office. We are planning two small rural offices soon and, in the next six months to one year, we will have many more.”

The company is adding another 500-600 employees and will probably end the year with a headcount of about 8,300-8,400. Currently, almost 99% of the workforce are working from home. Zoho has rural offices in Tenkasi and in Renigunta.

On the Covid-19 impact, he said almost 90% of the company’s revenue is from overseas, which would have been considered a good thing in the normal circumstances. “In the emerging new world, I start to worry about it. I don’t know whether the global trade system as existed pre-pandemic is going to continue a year or two or five from now. We are trying to improve our domestic market penetration. Five to seven years ago, we had more than 95% overseas exposure and we have been changing this mix. We have been systematically improving our India exposure, which is important, I believe. We also want to solve a lot of domestic problems. We have a lot of problems and there is no romance in solving a problem of a Japanese company in a location there, as against a company in Coimbatore,” he said.

While the US, which accounts for around 45% of the company’s business, has seen a 30% loss in GDP owing to the pandemic, some of the larger organisations, seeking to save at this time, are switching over to Zoho from other players. Based on the GDP loss, the company has prepared itself for a larger hit on its business.

“Impact of Covid on our business is not as bad as we feared, though we are still in April. I have prepared our own staff for a very tough time. We cancelled bonuses, which is normal in this time, we have not cut anyone’s pay, and I have told our employees that we may have to be prepared for a pay cut though we are not there yet. I don’t know whether we will be there in three or six months, nobody can promise anything this time. But at any cost we want to avoid lay-offs,” said Vembu.

The recovery in economy may not be a V-shaped or U-shaped one and it is going to be prolonged considering various systemic issues cropping up during the pandemic period. This is going to lead to consolidation of SaaS, which is already overdue. There are too many players with too many subscriptions that customers have to endure. These issues were already there, but got exposed now, Vembu said.

SaaS players with strong balance sheet, ability to endure cost structure that are aligned and who are not out of control in their spend are the ones who will survive this.

Zoho will be a neutral observer in this consolidation, since it doesn’t want to go out and raise funds in this environment for any acquisition. The company is re-orienting its products towards the changes that are taking place now.

The company on Wednesday announced Swadeshi Sankalp initiative with products designed to help education and government sectors in the time of Covid-19. This include an app, Zoho Classes, which will enable schools and colleges to connect with their students online. Zoho Classes, currently offered for early access, will integrate various aspects of education system, including teachers uploading courses, broadcasting live classes, sharing assignments and collecting responses and educational institutions collecting fees and sell merchandise such as school supplies through the mobile app. It has also announced offering Zoho ShowTime with Zoho Classes. For governments, it would offer Zoho Meeting for online meetings, which currently Karnataka State Council for Science and Technology is using. Zoho Creator, a low-code application development platform to be used for building Covid-19 apps for governments and non-profit organisations, Zoho Desk for Covid-19 call centre, currently used by Jammu and Kashmir administration, and Zoho Forms for health surveys, currently used by the Goa government are some of the company’s other offering.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Walmart partners with Tamil Nadu govt to help local MSMEs become its suppliers under Vriddhi programme
2Invested over $13 billion in teams, tech since 2016 on prioritising user safety and security: Facebook
3Afghan crisis: What impact Taliban takeover is having on Indian MSMEs, traders