Freshworks laid off 660 employees yesterday in a fresh round of layoffs, and that has drawn a strong reaction from a fellow Chennai-based entrepreneur.
Zoho founder and CEO Sridhar Vembu has lambasted Freshworks for laying off 660 employees while the company wasn’t struggling. Vembu didn’t name Freshworks directly, but it was apparent he was talking about its latest round of layoffs. Vembu called Freshworks’ actions “naked greed”.
“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. And to add insult to injury, when it can afford $400 million in a stock buy back,” Vembu wrote on X.
“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,” he said.
“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?” Vembu added.
“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. This is why choose to remain private. We put our customers and employees first. Shareholders should come last,” he added.
Freshworks had yesterday laid off 660 employees in a bid “to better align the company’s talent with its strategic priorities and to improve operating efficiency.” The company had simultaneously announced a $400 million share buyback from stockholders. Freshworks had previously laid off 60 employees in December 2022, and also carried out layoffs in March and June 2023. The company had gone public in 2021, and in 2024, founder Girish Mathrabootham had stepped aside and given the CEO role to a professional CEO.
All this appears to have drawn the ire of Sridhar Vembu, who runs Zoho is a manner that’s radically different from most companies. Zoho has been looking to generate as much employment as possible, and is opening offices in Tier 2 and Tier 3 towns to help people get jobs. Vembu himself works out of a village in Tamil Nadu, and his company has never raised any external capital. Zoho, incidentally, is one of India’s most profitable companies, and had reported a profit of Rs. 2,836 crore in FY23. And the business necessities of running a publicly-listed company — and the associated side-effects such as layoffs to buttress the share price — is something Vembu doesn’t seem to think very highly of.