Nasdaq-listed software firm Freshworks announced its plans to restructure its operations across all locations, including India and the US, by laying off 13 per cent of its workforce. This invoked strong criticism from Zoho founder Sridhar Vembu, calling out Freshworks for adopting US corporate tactics.
On Wednesday, Freshworks posted lacklustre third quarterly results, with operating loss widening to USD 38.9 million from USD 38.7 million in the same period a year ago.
Total revenue for the quarter improved 22 per cent to USD 186.6 million, but it did not arrest the loss. In an effort to improve operations, the software-as-a-service (SaaS) company founded by then-Chennai-based Girish Mathrubootham plans to cut around 660 jobs. According to Freshworks CEO Dennis Woodside, the job cuts are expected to incur costs of around USD 11 million to USD 13 million for the upcoming quarter, which will include severance payments and other expenses.
A day after the layoff announcement, Zoho's Sridhar Vembu took to the social platform X shooting a barrage of criticism at Freshworks.
'Shareholders should come last': Zoho founder rains down fire at Freshworks
According to Vembu, "a company that has USD 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."
He said that he didn't understand why there should be layoffs in a company that is neither struggling nor declining and making a loss.
With Freshworks joining a long line of US corporates, Vembu also made a note of how it is adopting the worst of that world. "This behaviour, sadly, has become all too common in the US corporate world, and we are importing it into India. It has only resulted in large-scale employee cynicism in the US, and we are importing that too," he said.
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
The Zoho founder also reiterated that it is corporate moves such as the layoff that his firm will remain private. "We put our customers and employees first. Shareholders should come last," he added.
Layoff season is back
The Salesforce competitor joins accounting big-four KPMG as a major brand to announce layoff this week. Reports on Monday said that KPMG was looking to cut at least 330 jobs, or 4 per cent, of its audit workforce in the US.
Last week, the maker of the open-source browser, Mozilla Foundation, announced the layoff of 30 per cent of its workforce.
More job cuts circled the tech sector, with Elon Musk's X laying off an undisclosed number of people, according to The Verge.
Reports in October also revealed that Samsung cut around 10 per cent of the workforce in Southeast Asia and Australia, and TikTok laid off at least 100 people, mostly in Malaysia.
ALSO READ | Jet Airways: From major Indian private air carrier to bankruptcy and liquidation
Edutech firm Coursera also cut 10 per cent of its roles. However, last month's major shocker was aircraft maker Boeing, slashing 10 per cent of its massive workforce, impacting at least 17,000 people.
The layoff trend, which was triggered during the Ukraine war scare, has been in full swing for the past two years. While it showed signs of slowing in the middle of 2024, the latest trends since October paint a gloomy picture for professionals working in the tech sector.
(Story updated to add the reaction of Zoho founder Sridhar Vembu.)
