Sridhar Vembu, Founder of the Chennai/US-based Zoho, was critical on the layoff of 660 employees announcement by Freshworks, which was also started in Chennai with major customers in the US. “This behavior, sadly, has become all too common in the US corporate world and we are importing it in India. It has only resulted in large scale employee cynicism in the US and we are importing that too, Vembu said in a social media post.
“This is why choose to remain private. We put our customers and employees first. Shareholders should come last,” he said in a social media post without naming Freshworks.
The Chennai/US-based IT company Freshworks on Wednesday had announced a 13 per cent reduction in its global workforce, which would impact 660 employees. A majority of its employees work in India, and about 400 employees will be impacted here.
Incidentally, Girish Mathrubootham, Founder of Freshworks, was once an employee at Zoho. Both Zoho and Freshworks offer Software as a Service (SaaS).
Vembu said that 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 per cent rate and making a cash profit, laying off 12-13 per cent of its workforce should not expect any loyalty from its employees ever. And to add insult to injury, when it can afford $400 million in a stock buy back, he pointed out.
“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,” said Vembu.
“Here is a critical question to its leadership: 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? Are there no such opportunities in tech? Are you so lacking in curiosity, vision and imagination? Are you so lacking in empathy?”
Let’s say they decide they have too many people but they are still growing and they have lots of cash. Simply not hiring for some time will allow the company to redeploy the excess people they hired.
“Second, if you have lots of cash (that is the case I mentioned), applying our imagination to start new products and services would be a good way to deploy people. Layoffs in the circumstances I mentioned totally destroy morale,” said Vembu.
Meanwhile, on Thursday, the stock price of Freshworks closed at $16.82 on the Nasdaq, up by $3.73 or by 28.5 per cent.