Why Zoho's Sridhar Vembu is trending after ‘pay hike, mass layoff’ tweet: Losing 80% clients, making mega business, more
Sridhar Vembu, founder of software giant Zoho Corporation, is taking a cautious approach amid an uncertain business outlook and rising artificial intelligence (AI) infrastructure costs. The company has put its annual salary hikes on hold and cut back on marketing expenditure.
A pioneer in bootstrapped, capital-efficient B2B SaaS (Software-as-a-Service), Vembu said, "We have cut down on our marketing budget. We have also told our employees that we cannot have our usual pay increase this year. I have apologised for not being able to avoid this."
Citing the reasons behind the move, Vembu said, “The business outlook for software is uncertain and AI has raised costs dramatically with a) massive 4-fold increase in server prices which we need for data centers b) AI usage increasing rapidly, leading to much higher expenses, which we are trying to control. On top of that is the challenging geopolitical backdrop.”
He said, "We are in the middle of reinventing ourselves." He said the company will work hard to avoid mass layoffs but "the outlook for software jobs in general is grim". The next 3-5 years will decide how our reinvention has worked. Please pray for us," Vembu said.
Vembu started building Zoho in the 1990s, in a small apartment located in the suburbs of Chennai. The startup, which was initially called "AdventNet, became a ₹ 1,00,000-crore multinational corporation.
Sridhar Vembu's journey exemplifies his determination and adaptability, as he transitioned from academia to the world of practical problem-solving and software development.
Sridhar Vembu was born in a village in Thanjavur district, Tamil Nadu, where his family primarily engaged in farming. After some time, his father relocated to Chennai, where he worked as a stenographer in the high court.
During this period, Sridhar Vembu took the Joint Entrance Examination (JEE) and achieved the 27th rank in all of India. He got into IIT Madras and became the first person in his family to attend college, where he chose to study electrical engineering.
According to a case study, Vembu had a strong desire to build a computer from scratch and dreamt of becoming either a scientist, a professor, or conducting fundamental research in this field.
However, upon reviewing the IIT Madras syllabus, he found it lacked depth and did not fulfil his aspirations. Despite his reservations, he persevered and cleared the exam.
Later, Vembu studied at Princeton University and earned a Master’s degree and PhD there.
Despite these achievements, Vembu realised that his passion lay elsewhere, and he yearned to make a more significant impact, the case study revealed. His desire to contribute to society led him to explore opportunities beyond academia.
He eventually joined a company, Qualcomm, where he encountered a project that required knowledge of the programming language C++. Despite having no prior experience with C++, he taught himself the language. Based on that knowledge, he created software compatible with the hardware.
After a brief stint at Qualcomm in the US, Sridhar Vembu co-founded AdventNet in 1996, which later evolved into Zoho Corporation. He is now known as the Chief Scientist and Co-founder of Zoho Corporation.
Zoho’s story started in 1996 when Sridhar, Kumar and Sekar Vembu teamed up with Tony Thomas to create AdventNet. It was an unlikely bet at a time of fractured internet infrastructure and scarce funding.
Their first product, WebNMS, wasn’t flashy, Story Watch reported. It was a network management tool that solved a real problem.
By 2000, AdventNet was making more than 10 million dollars in annual revenue, the report added.
Zoho faced a daunting situation in 2000. They, however, responded strategically.
In 2000, the Dot.com bubble burst had caused thousands of companies to go bankrupt and were unable to pay their bills. Meanwhile, the NASDAQ, which had been sitting at 5000 points, plummeted to 1140 points, a case study noted. Companies like CISCO, Intel, Oracle, and others saw their shares affected, with an 80 per cent drop in value, it added.
At the time, Zoho was still a small start-up at that time. The company wasn't publicly listed on the stock market, but "80 per cent of its clients had disappeared overnight", leaving it in a catastrophic situation, the case studay said.
You have outstanding orders to fulfil, employees to pay, and your client base is shrinking rapidly. What would you do in such a situation? This is where Sridhar’s wisdom proved invaluable.
Vembu had kept a cash reserve. He used to generate cash and wisely retained it. He didn't invest it in unnecessary areas or spread it thinly, the study noted. They had cash reserves ready, and so he said, "Until we sort things out, we have enough cash to sustain us for 6-12 months, and we'll manage everything," according to the case study.
It added that unlike some companies that might have chosen to lay off employees due to a lack of business, they took a different approach. They said, "No, this year, 2000, will be the year of R&D - Research and Development." All 115 employees found themselves without immediate tasks, so they turned their focus to brainstorming new products and improvements.
During this period of intense R&D, the company decided to enhance their existing product, which was already selling well. While making changes to their ERP software, they developed a new product called "Manage Engine," which today contributes significantly to the company's revenue.
Our mantra has always been to invest in people and products. That's why most of our investments go towards R&D - Sridhar Vembu
They contemplated entering the cloud services market. They envisioned a model where the main server would be hosted by Zoho, and services would be delivered over the cloud. This led to the birth of "Zoho."
Zoho aimed to provide software that covered all aspects of business, such as HR, management, hiring, and finance.
Their approach mirrored their earlier strategy – while big companies were selling expensive software to other big companies, Zoho decided to offer similar solutions but at a smaller scale and a more affordable cost to small businesses. Consequently, their client base grew rapidly.
Vembu was one of the first Indian entrepreneurs to bet big on SaaS, and started the Zoho brand for cloud products as early as 2005.
In 2005, it launched Zoho Writer, a cloud-based word processor. Soon after came Zoho Creator. At the time, very few companies were thinking about cloud software. Sridhar and his team saw the shift early.
This eventually led to the creation of an ecosystem that turned Chennai into the SaaS capital of India, according to Anant National University.
Four years later, in 2009, AdventNet officially became Zoho. What began as a single product slowly grew into a full suite of business tools, from CRM to finance, HR, marketing and analytics.
Under his leadership, Zoho Corporation, with brands like ManageEngine and Zoho, grew into a global technology powerhouse, serving over 130 million users across more than 150 countries, all without relying on external venture capital funding.
Today, Zoho offers over 55 products that span across business functions from CRM, finance, HR, productivity and AI solutions, all built on its proprietary platforms.
Earlier in 2025, Vembu shifted his role from CEO to Chief Scientist to spend more time on R&D and long-term technology initiatives, such as AI.
Through Zoho’s rural development (RD) efforts, he has set up offices and R&D centres in villages and small towns like Tenkasi, Tharuvai, Kottarakara and Renigunta, enabling engineers to work on world-class technology without leaving their communities.
In fact, Zoho opened its first rural office in Tenkasi in 2011 and developed and launched Zoho Desk from there in 2016. This RD through R&D model pushes for creating R&D hubs in rural areas.
Vembu has been a strong proponent of developing deep-tech capabilities in India, especially for critical sectors like healthcare and defence.
According to his profile on Anand National University's website, Vembu has invested in several companies that are aligned with the same mission of developing this sovereign tech.
For his contributions, he was presented with the Padma Shri in 2021. He has previously served on the National Security Advisory Board.
Vembu’s leadership blends business success with social purpose, redefining what it means to build for both global markets and rural India.
Forbes India's 2025 Rich List placed Sridhar Vembu and his siblings at an estimated combined net worth of $6 billion. This is a family wealth figure and should not be treated as Vembu's individual net worth.
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