Sridhar Vembu, the founder of Zoho Corporation, recently strongly criticised Freshworks’ layoffs. The company downsized 13% of its workforce—around 660 employees—despite reporting a revenue increase of 22%. In a candid social media post, Vembu condemned the move, describing it as a sign of “naked greed” and a concerning reflection of U.S. corporate influence infiltrating Indian businesses.
Freshworks, based in Chennai, reported a significant third-quarter revenue rise to $186.6 million, coupled with plans to repurchase $400 million in stocks. The company explained the layoffs as necessary to “streamline operations,” impacting employees across the U.S., India, and other regions. However, Vembu questioned why Freshworks layoffs were needed with substantial cash reserves and stable growth, particularly during a time when companies with ample resources should be supporting, not shedding, employees.
Vembu’s reaction centres on what he describes as the prioritization of shareholder interests over the well-being of employees. This “shareholder-first” philosophy, popularized by the Friedman Doctrine, places profits and shareholder returns at the forefront, often at the expense of employee security and morale. According to Vembu, this approach is “socially unsustainable,” warning that it cultivates a culture of cynicism and division within the workforce. The Zoho founder suggests that the trend toward layoffs in profitable companies is a short-sighted attempt to maximize stock value, impacting employees and eroding long-term loyalty and trust.
Freshworks’ $400 million stock buyback program has been a focal point of Sridhar Vembu’s criticism. He argues that, instead of repurchasing shares, companies should consider investing in new business lines or projects that could create opportunities for existing employees. “Don’t you have the vision to invest $400 million in another line of business where you can deploy those people you hired?” Vembu asked. By reallocating these funds, he argues, companies could sustain employment and foster growth in new areas, ultimately benefiting both the company and its workforce.
Sridhar Vembu also highlighted the benefits of Zoho’s private ownership structure, which allows the company to prioritize employees and customers over shareholders. He pointed out that Zoho’s ability to remain privately held enables it to avoid pressure from Wall Street and private equity investors to make decisions that may harm employee morale for the sake of short-term profits. Zoho’s focus, he stated, is on sustaining long-term growth through employee and customer satisfaction rather than stock market performance. “We put our customers and employees first. Shareholders should come last,” Vembu affirmed.
According to Vembu, the emerging “use and throw” mentality in corporate hiring is a damaging trend that undermines the traditional workplace bond of loyalty between employers and employees. This approach, he noted, dehumanizes the workforce and treats employees as expendable. Vembu cautioned that companies operating with this mindset might struggle to retain talent in the long run, as employees increasingly value companies that demonstrate a commitment to their well-being and career growth.
As the tech industry grapples with the global economic landscape, Vembu’s comments highlight a growing debate around corporate responsibility, employee welfare, and the ethics of profit maximization. His critique of Freshworks underscores the potential pitfalls of prioritizing short-term gains over sustainable growth, particularly in an era where public scrutiny of corporate actions is higher than ever.
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