Zoho's Vembu Slams Freshworks Layoffs, Rekindling Old Rivalry

In the backdrop of layoffs at Freshworks, Zoho Founder Sridhar Vembu has said that a cash rich company with the ability to afford stock buyback, laying off employees is a move made for “naked greed”.

Chennai/US-based Freshworks reportedly laid off  13% of its workforce on Thursday, affecting 660 employees, in a cost cutting measure, to improve efficiency.

Even though Vembu did not name Freshworks, in an X post he wrote, “A company that has $1 billion cash, which is about 1.5 times its annual revenue, and is actually still growing at a decent 20% rate and making a cash profit, laying off 12-13% of its workforce should not expect any loyalty from its employees ever. And to add insult to injury, when it can afford $400 million in a stock buyback.” 

Freshworks Chief Executive Officer Dennis Woodside, in a mail to employees, had reportedly said that the company is realigning its workforce to add more focus on artificial intelligence, customer and employee experience. These changes are being made while the business is profitable, he had noted. 

“I can understand the unfortunate reality of layoffs when a business is struggling or declining and making a loss. This is not that situation, this is naked greed, nothing less,” Vembu wrote. 

He also questioned if the company leadership does not have the vision and imagination to invest $400 million in another line of business, where previously hired employees can be put to work. “Are there no such opportunities in tech? Are you so lacking in curiosity, vision and imagination? Are you so lacking in empathy?” he questioned. 

The rift between the two posterboys of India’s Software as a Service(SaaS) industry has been building up for a while now.

Mathrubootham before founding Freshworks(previously known as Freshdesk) worked with Zoho for almost 10 years where he rose the ranks from pre-sales engineer to vice president of product management. Even back then Vembu had accused him of taking some critical staff along. 

Further, both the companies even battled it out in the court when Zoho in 2020 filed a lawsuit against Freshworks accusing the company of stealing confidential information, including access to Zoho's Customer Relationship Management (CRM) software. This was further settled in 2021 with Freshworks admitting that a former employee had accessed and used Zoho's data without permission. 

Vembu in his X post also added that laying off has become common in the US corporate world and it is now being imported to India. “This is why choose to remain private. We put our customers and employees first. Shareholders should come last,” he wrote. 

Freshworks listed on Nasdaq in 2021, after completing an initial public offering worth over a billion dollars. The company has conducted multiple rounds of layoffs since last year, and currently employs around 5,000 people.