Zoho founder criticizes rival Freshworks for layoffs despite being profitable
Indian billionaire and Zoho founder Sridhar Vembu has slammed Freshworks for laying off employees. Freshworks recently announced its Q3 2024 results and the decision to lay off 13% of its workforce. Voicing his discontent without taking the rival's name, Vembu hinted that some companies are resorting to job cuts due to 'naked greed,' instead of financial necessity. His remarks also came in response to several tech firms' moves to appease Wall Street and prioritize profitability over employees.
Vembu questions loyalty in firms with mass layoffs
Vembu also questioned the expectation of employee loyalty from companies that conduct mass layoffs, despite having huge cash reserves. He said, "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."
He criticizes layoffs amid financial growth
Vembu slammed companies for firing employees despite being financially healthy. He said, "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."
Freshworks's workforce reduction and share buyback program
Freshworks, a NASDAQ-listed SaaS major, announced plans to cut its global workforce by around 660 employees. The decision comes as part of an effort to streamline operations even as it reported total revenue of $186.6 million for Q3 2024, growing 22% over the same period in 2023. Meanwhile, Freshworks's board also approved a $400-million share buyback program without a timeline for execution.
Vembu challenges Freshworks's leadership on layoffs
Vembu challenged Freshworks's leadership for deciding to lay off employees and start a share buyback program. He asked, "Don't you have the vision and imagination to invest $400 million in another line of business where you can deploy those people you hired but you don't want anymore?" He further claimed such behavior is becoming increasingly common in the US corporate world and being imported into India.
Advocating for employee-first approach in business
Vembu also advocated for an employee-first approach in business, saying his company puts customers and employees before shareholders. He advised companies with too many employees and cash reserves to not hire for a while or launch new products/services to put their workforce to good use. Vembu cautioned that layoffs in such cases could hurt employee morale badly and eventually hurt the company's success.
