'This Is Naked Greed': Zoho's Sridhar Vembu Slams Freshworks For Layoffs, Buyback

"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," Vembu said

Zoho Corp founder Sridhar Vembu

Source : X

In a pointed critique of Freshworks, Zoho founder Sridhar Vembu said on Friday that a company with over a billion dollars in the bank, yet opting to prioritise shareholders by implementing layoffs and announcing a buyback, should not expect loyalty from its workforce.

"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 buyback," Vembu wrote in a post on X (formerly Twitter).

"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 added. 

Although Sridhar Vembu did not explicitly mention Freshworks in his post on X, the implication was clear. His sharp criticism came just a day after Freshworks reported its earnings and announced the shocking layoff of 660 employees, alongside a $400 million buyback. These moves had sent Freshworks' shares soaring 28 per cent in the US markets on Thursday.

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,…

— Sridhar Vembu (@svembu) November 7, 2024

Vembu also posed a series of pointed questions to the Nasdaq-listed company. "Don’t you have the vision and imagination to invest that $400 million in a new business, where you could redeploy the people you hired but no longer need? Are there no such opportunities in tech? Are you really so lacking in curiosity, vision, and empathy?” he said.

Zoho's founder explained that the company’s decision to remain private stems from its commitment to prioritising customers and employees over shareholders. "Shareholders should come last," he added.

Meanwhile, Dennis Woodside, CEO of Nasdaq-listed Freshworks, announced on November 7 that the company would cut its workforce by 13 per cent, translating to approximately 660 job losses. This move is part of the company's strategy to improve operational efficiencies and simplify its organisational structure.

Freshworks, which has more than 5,000 employees, has already undergone multiple rounds of layoffs and management restructuring since 2024. In May, a significant management reshuffle saw Girish Mathrubootham, the company's founder and former CEO, transition to executive chairman, with Dennis Woodside taking over as CEO.

The relationship between Zoho and Freshworks has been tense and contentious. Girish Mathrubootham, who previously worked at Zoho, founded Freshworks in 2010, and the two companies have had a fraught history ever since. In March 2020, Zoho filed a lawsuit against Freshworks, accusing the company of stealing confidential information.

The two parties settled in 2021, with Freshworks admitting that a former employee had unlawfully accessed and used Zoho’s confidential sales data.