Downturn still nascent, it is time for caution, not expansion: Zoho founder

In an exclusive interaction with Business Standard, Sridhar Vembu say the trend of large-scale layoffs in Silicon Valley has now hit Indian shores

With the world yet to come to terms with the recent collapse of Silicon Valley Bank (SVB), Signature Bank and Credit Suisse, Sridhar Vembu, founder and CEO of software-as-a-service (SaaS) major Zoho Corporation, believes that the current global downturn is still quite nascent, and that for the SaaS industry and Zoho, it is ‘time for caution and not expansion.’

In an exclusive interaction with Business Standard, Vembu said the industry should be concerned about two big things – the current global financial situation and the evolution of artificial intelligence. “Now, two big things are there -- one is the global situation, including the failure of SVB and Credit Suisse, all that one side and the other is AI evolution happening. We have to take time to digest all this,” Vembu said.

“See, what the shape of future business is. We have navigated two big crises – the dotcom bust in 2001 and the global financial crisis in 2007-09. Experience shows now it is the time for caution, not expansion,” he added.

With the SVB collapse affecting the banking tech and startup sectors, it is widely believed that this may have a cascading effect on India’s tech industry.  Asked about the impact the global crisis could have on India, Vembu said, “This downturn is very young. I don’t think we have seen much yet.” Vembu’s comments on expansion come at a time when, during the past six months, the company opened two ‘hub’ offices in Tirupur and Trichy, and plans to open offices in Tirunelveli and Madurai districts in Tamil Nadu, along with one in Uttar Pradesh.

Regarding the recent layoffs in the industry in India, the Zoho founder added that following the Silicon Valley trend for several years, this was expected in the Indian market too. “We had absolutely crazy stuff going on in the industry--you leave a job and get a 3x offer and again get a 2x offer, all this was going on in Bengaluru. We have not seen this India. Silicon Valley has seen it and you also know what happens next. Silicon Valley people are generally used to layoffs. Every person who has been in the industry for 15-20 years would have been laid off at least 3-4 times. In India, we aren't used to that concept. So when it came here, people were shocked,” he said.  

He added that those who had observed Silicon Valley have come to terms with the fact that when ‘things go crazy, it is inevitable that they will crash.’

“GFC was shocking, the entire world financial system nearly collapsed. Similarly, nobody predicted SVB's collapse. So many startups are seeking government intervention now. Until a month ago, all these guys would have been saying 'no government regulation, we want a free market' and all that. They have all turnedd around now, saying please bail us out,” Vembu said.