Zoho founder Sridhar Vembu recently expressed strong criticism towards Freshworks following their announcement of laying off 660 employees. Vembu labeled this move as a demonstration of "naked greed" infiltrating the corporate culture of India from the U.S. He particularly pointed out the contradiction of a profitable company with significant cash reserves resorting to laying off a portion of its workforce, emphasizing the lack of loyalty such actions evoke from employees.
Vembu's comments struck a chord with Freshworks, without mentioning the company directly, as they align closely with recent events at the Chennai-based SaaS competitor. Despite Freshworks reporting a 22% revenue increase, they chose to reduce their workforce by 13% while simultaneously announcing a $400 million stock buyback. Vembu criticized this decision as a failure of leadership imagination, questioning why the company did not consider investing the huge sum into new business ventures instead of letting go of employees. He emphasized the importance of prioritizing employees and customers over shareholders, highlighting Zoho's decision to remain a private company as a shield from such pressures.
Vembu's stance reflects a broader critique of the prevailing corporate culture that prioritizes shareholder profit above all else. With references to the Friedman Doctrine and the negative consequences of a profit-maximizing approach, he warned against the unsustainable nature of prioritizing short-term profits over long-term social impact. Vembu underlined the damaging effects of treating employees as disposable assets, advocating for a shift towards a more empathetic and sustainable business model that focuses on the well-being of all stakeholders.