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Over the last three months during the lockdown, Zoho Corp CEO Sridhar Vembu has been running the company — of 8,000-plus employees — from a remote farm near Tenkasi, a town in southern Tamil Nadu. The coronavirus has disrupted the entire world. But, companies like Zoho are facing the challenge and learning from the crisis. In an email interaction with BusinessLine, Vembu shares the impact of Covid19 on his business, industry and the bumpy road ahead. Edited excerpts:
Could you describe the impact of Covid-19?
The Covid-19 impact spreads out in waves outward, like a tsunami. The first to be impacted were the businesses most dependent on customer foot traffic like restaurants, movie theatres, travel and tourism companies. Then it affected the next tier of companies, including SaaS companies that serve these businesses. Customers are requesting deferral of subscriptions. Some customers are sadly losing their entire businesses. The impact has been less than we had feared two months ago but it is still there. I am sure more waves are coming. It is too early to make any definitive assessments, but going back to the old normal of November 2019 appears unlikely.
What changes the pandemic brought in your business model?
We have cut back on marketing spend. We are placing a stronger emphasis on remote work tools, which are useful for our own work at Zoho. To survive in these changed times, I would emphasise on self-reliance, resilience and real capability building. Can we meet our own diverse economic needs and those of the community around us? That is how we think about the problem at Zoho.
Could you quantify the loss, if any?
We were growing at a fairly good clip and we have lowered our forecast, of course. We have not had as steep a fall as I feared two months ago, but it may lie ahead, as the tsunami spreads outward. I take this month to month.
Did customers leave you?
Even during this downturn, we have compensated for the loss of customers with new customers. Our overall customer count has been flat to growing slightly. We have a wide portfolio of more than 45 applications. While several products have seen a decrease in demand, which is natural as our customers are also suffering through the global economic downturn, we have also witnessed demand for our productivity and collaboration suite pick up. Our online meeting solution, Zoho Meeting, webinar and conference solution Zoho ShowTime, remote assistance software Zoho Assist and Zoho Lens have become more popular as businesses are adopting remote working culture. We offer all these products as part of our Remotely suite for free to all businesses till July 1.
What is the short-term outlook, say three months?
We have a diversified product suite, a large and loyal customer base; attractive pricing and loyal group of employees. So while these are very challenging times, I am reasonably confident about our business in the near term. Some of the new offerings will allow us to weather the storm.
...in the long term?
Longer term, how the global market shapes up is difficult to forecast at this point. Trade frictions were rising before the pandemic. Brexit happened before the pandemic. Those issues did not go away — if anything, the pandemic has made the economic challenges and the associated political challenges worse around the world. That is why I take this one month at a time.
What are the learnings from this pandemic?
Even before the pandemic, we had been expanding in smaller towns like Tenkasi and Renigunta, hiring locally. By creating high-value jobs away from the cities, we help retain the talent where they feel at home. I have long discussed the challenges of India’s urbanisation model, where the existing big metros are massively overloaded. These problems are not just of the government. The private sector has to play a role in solving them, and that is why Zoho has been pushing to locate jobs in smaller towns. The pandemic accelerates this trend by adding a new dimension — social distancing, which is far easier to practice in a village than in an overcrowded metro.
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