Without directly naming Freshworks, Vembu’s post aligns closely with recent developments at the Chennai-based SaaS competitor, which posted a 22% revenue increase but announced the layoff of 13% of its workforce.
Zoho founder Sridhar Vembu didn’t hold back his criticism following Freshworks’ decision to lay off 660 employees, calling out what he sees as “naked greed” in corporate America creeping into India. “This behavior, sadly, has become all too common in the US corporate world, and we are importing it in India,” Vembu said in a social media post.
Without directly naming Freshworks, Vembu’s post aligns closely with recent developments at the Chennai-based SaaS competitor, which posted a 22% revenue increase but announced the layoff of 13% of its workforce. Vembu expressed disdain for a company that lays off workers despite being profitable and holding substantial cash reserves, saying, “A company that has $1 billion cash… and is actually still growing at a decent 20% rate… laying off 12-13% of its workforce should not expect any loyalty from its employees ever.”
Freshworks also announced a $400 million stock buyback, which Vembu condemned as a failure of leadership imagination. “Don’t you have the vision to invest $400 million in another line of business where you can deploy those people you hired?” he questioned, adding, “Are you so lacking in curiosity, vision, and empathy?”
Vembu’s comments come as Freshworks, listed on Nasdaq, reports third-quarter revenue of $186.6 million, marking significant growth. Yet, the company cited “streamlining operations” as it cuts roles across the U.S., India, and other regions. Vembu argued that, rather than laying off workers, companies with ample cash could pause hiring or explore new projects to deploy their workforce effectively.
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,…
— Sridhar Vembu (@svembu) November 7, 2024
“We put our customers and employees first. Shareholders should come last,” he emphasized, sharing that Zoho’s decision to remain private shields it from these pressures. In his response to users on X, Vembu described the damage that prioritizing shareholder profit causes to employee morale, pointing out that corporate America was not always this way. “This private equity and Wall Street-led ‘shareholder first’ world does not work and won’t even work out well for shareholders.”