AI-M High, India: Sridhar Vembu

The audacity of Zoho Corporation’s CEO Sridhar Vembu has always been noted and appreciated in the corporate circles in India. But his endeavour of leading development from the “local” is nothing short of an enigma. A testament to this is Zoho’s Tenkasi office, located 630 kilometres from Chennai, which hosts more than 700 employees.

But the Tenkasi office is just one of the five Zoho hub offices that accommodate up to 1,000 employees, while smaller branches or ‘spoke offices’ house up to 100 employees. Under Vembu’s leadership, Zoho envisions each hub office to have a few spoke offices associated with it for infrastructure support and team collaboration.

Zoho's Tenkasi Office, located 630 kilometres from Chennai

Zoho currently has five hub offices, including ones in Chennai, Tenkasi, and Renigunta and around 30 spoke offices presently in India. Nearly 2,000 employees are working out of Zoho’s hub-and-spoke offices in villages and Tier-2/3 towns, out of which about 1,000 employees have been reportedly hired locally. As part of their rural empowerment efforts, the spoke offices periodically conduct free career awareness sessions in surrounding colleges, as well as upskilling workshops and incubation programmes to identify and hire talented local youth.

Nation-building From The Rural

Sridhar Vembu is a man of many passions. He likes to swim, read, communicate, code and research. He begins his days at 3 am and hits the bed by 9 pm. Besides this, he also has a deep sense of serving the nation and the “local”, wherever the talent exists. This has led him to pioneer the hub-and-spoke model of offices for Zoho to cater to a distributed workforce, as part of its 'transnational localism' strategy of being locally rooted, while staying globally connected. Zoho began to double down on this model in 2020.

Zoho's spoke office at Kottaiyur, Sivagangai (Tamil Nadu)"The distributed workforce model reflects the idea of distributing growth and income across Tier 2/3 communities instead of urban concentration. Many of our product development teams today sit out of these hub-and-spoke offices, including some teams that are involved in deep-tech R&D. The long-term vision of these efforts is to create self-sufficient and economically prosperous rural communities,” says Vembu.

Besides this, Zoho is also supporting Kalaivani Kalvi Maiyam (KKM) school, which is located on its farm campus. It functions as a free learning centre catering to students aged 2-16. The primary focus at KKM is literacy and numeracy, to build a strong foundation in communication and critical thinking. Vocational training such as terracotta jewellery making, two-wheeler mechanism, and cultural training such as martial arts (Silambam) and classical dance (Bharatanatyam) are also added as part of the curriculum.

Sridhar Vembu (CEO, Zoho Corporation) at Kalaivani Kalvi Maiyam (KKM) school in Govindaperi, Tenkasi 

Started in 2020 in Govindaperi village near Tenkasi, KKM school follows the Montessori system for primary school and is aligned with the National Institute of Open Schooling. Its objective is to empower the students with practical life skills and befitting capabilities, which will guide them when they graduate in pursuing college studies or directly taking up a job or entrepreneurship.

"The driving philosophy behind the rural initiatives is to preserve and revitalise small villages and towns before they decline due to severe urban migration and lack of resources. The future generation in the rural areas needs to be enabled with the necessary skills, capabilities, and tools to nurture grassroots innovation, solve local problems, locally manufacture high-value goods, and drive community progress," explains Vembu.

‘Go For AI, India’

Earlier in April, Vembu hosted journalists at Zoho’s Tenkasi office and spoke on the need for India to go head-first into artificial intelligence (AI) innovation to prevent international monopolies from forming. He suggested that the country needed to do something on the scale of Digital Public Goods, which has already been lauded by leaders across the globe including Microsoft Chairman and CEO Satya Nadella.

At present, the US and China are undoubtedly leading the global pack in the AI revolution, which is touted to add trillions of dollars to the global GDP. According to a recent Goldman Sachs report, Generative AI alone is expected to increase global GDP by USD 7 trillion and lift productivity growth by 1.5 percentage points over 10 years.

But much before ChatGPT’s famous public rollout in November 2022 and the resultant AI boom, IBM CEO Aravind Krishna had predicted that the technology could contribute as much as USD 10 trillion to the global GDP over the coming decade. We can only assume that this number would be much higher now, considering the interest the space has received in the months bygone.

Sridhar Vembu at Zoho's Tenkasi office

Despite the existing conundrums around the risks posed by AI, Vembu says India must have a strong AI policy in place to excel in the space. He also announced he had signed an Open Letter addressed to stakeholders including IT researchers, academicians, industry leaders, and members of civil society to help evolve a national consensus on how to utilise AI to achieve national goals. This letter was also signed by Rajiv Kumar (Chairman, Pahle India Foundation) and Sharad Sharma (Co-founder of iSPRIT Foundation).

Last year, when BW Businessworld had the chance to speak to NVIDIA Founder and CEO Jensen Huang during a press conference, he too said (much like Vembu) that the age of classical enterprise computing had reached a plateau. Huang said that new computing has emerged - artificial intelligence (AI). He emphasised that the presence of IT talent and companies like Infosys, TCS and Wipro in India gave the country a chance on delivering its AI expertise to the world's enterprises.

‘Software Jobs Will Get Hit By AI’

It isn’t lost on the global software community that the emergence of low-code no-code (LCNC) and now, with the ascendance of AI, their jobs would be affected. During the press conference at Tenkasi, Vembu emphasised that soon companies would longer need armies of programmers/software developers as Large Language Models (LLMs) could train and learn code from each other and enhance it.

The Goldman Sachs report mentioned earlier in this story also highlighted that AI systems would have a major impact on employment markets. Increased automation is expected to affect job losses of up to 300 million in the future.

“Jobs AI will pose a threat to would-be programming jobs. I have been saying this internally for at least four to five years now because I saw the potential of how much automation could be done in software development,” Vembu mentioned, during the press conference at Zoho’s Tenkasi office.

Hard times But No Layoffs At Zoho

Back at Vembu’s home at Zoho’s farm (a 20-minute drive from the Zoho Tenkasi Hub), he told BW Businessworld that his company was willing to take a reduction in profit and accept losses for a certain period to persist with the company’s no-layoff policy despite the tough times globally.

Vembu says all companies should take it month-to-month on their plans and focus on fundamentals in the current tough market scenario that is being dictated by macroeconomic challenges. He insisted it is important for companies to focus on research and development (R&D) and build a company culture as it would matter in the long run. “That's why we have taken a no-layoff policy at Zoho. We would rather share the pain with our employees,” he says.

Vembu adds that Zoho has been a profitable company and was willing to take a reduction in profit margins to stay away from layoffs. “That's why you build up your reserves during good times so that you can take a loss during bad times. That way the employees have a measure of security, which translates into longer-term R&D culture. That’s what we want to do.”

The statement from Vembu comes at a time when the world’s most valuable companies including Google, Meta, Microsoft, Amazon, Twitter, Disney, Accenture, Indeed, McKinsey, Zoom, Yahoo, SAP, Walmart and many more have announced thousands of job cuts individually. The total number of layoffs at these major companies in 2023 stands at over 2,00,000 in 2023 alone.

These companies have admittedly over-hired, in anticipation of a greater tech boom, only to realise that they had made a grave mistake as things worsened in 2022 and 2023. But despite tough times, Vembu insists that retaining employees in the current climate will provide Zoho workforce a measure of security, which would translate into a longer-term R&D culture.

‘Record Customer Wins In March’ 

The Zoho CEO believes that the signs are positive for his company despite the anticipated drop in tech spending all over the world in 2023. During the press conference in Tenkasi, he noted that the company had signed up its highest-ever number of customers in a month during March 2023.

Zoho Suite has six lakh customers in 2023 and the number is expected to reach one million in the time horizon of one-and-half years, Vembu added.

During BW Businessworld’s chat with Vembu, he also stresses that companies doing sbusiness with Salesforce in India or ServiceNow are massively overpaying and that those technologies are not “worth it”.

“We can replace them at enormous savings. This is true for our US customers and it is also true for European customers. This applies to our Indian customers as well. And we saw that switch just last month when we won a lot of deals in March,” he says. “I consider companies like Salesforce extremely bloated and expensive in terms of their product offerings and their pricing.”

Vembu emphasised that Zoho could compete aggressively for business with Salesforce and ServiceNow in the present tough market conditions by offering a good choice, in terms of both superior products and vastly superior value. “That is why we think that even in an environment of tough IT spending, we are doing better,” Vembu says.

In 2023, Zoho has now set its sights on Eastern Uttar Pradesh and surrounding areas to implement its hub-and-spoke model and is currently focused on beginning its journey in the northern part of the country with the vision of making India its #1 market in the next seven to ten years, displacing the US from numero uno position.

Also Read: VMware CEO Raghuram Concurs With Zoho’s Vembu, Says India Should Foster AI Innovation As Part Of National Infra