“This is naked greed, nothing less”: Zoho’s Sridhar Vembu Criticises Freshworks’ Layoffs

Sridhar Vembu, the founder of Zoho, has recently made headlines for his candid remarks regarding the practices of cash-rich tech giants that resort to layoffs as a means of appeasing Wall Street investors.

Sridhar Vembu’s comments come in the wake of significant layoffs announced by Freshworks, a SaaS company that recently let go of 660 employees despite having a healthy cash flow and positive growth metrics.

Vembu took to X (nee Twitter) to vent his ire, saying, “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 percent rate and making a cash profit, laying off 12-13 percent 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. 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”.

The Freshworks Layoff

Freshworks, which has previously garnered attention for its innovative solutions, found itself in the spotlight for all the wrong reasons. The decision to lay off a significant portion of its workforce raised eyebrows, especially given that the company reported a 22% increase in revenue. Vembu’s assertion that such actions stem from “naked greed” resonates with many who view the layoffs as a betrayal of employee trust.

In his critique, Vembu pointed out that Freshworks had approximately $1 billion in cash reserves, which was more than adequate to sustain its operations and navigate challenges without resorting to drastic measures like layoffs. This financial cushion, combined with the company’s continued growth, raises questions about the motivations behind such decisions. Are companies genuinely struggling, or are they simply prioritizing short-term stock performance to appease investors?

Vembu’s pointed remarks

While not going so far as to mention Freshworks by name, it is clear who he was referring to, and the tech titan was in full flow. He wrote on X, “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?”

The Moral Responsibility of Corporations

Vembu’s critique raises an essential question: what is the moral responsibility of corporations in today’s economic landscape? Should companies, especially those with substantial financial resources, prioritize their employees’ well-being over short-term financial gains? The answer to this question lies at the heart of the ongoing debate about corporate ethics and accountability.

The Impact on Company Culture

When layoffs occur in a company that is otherwise financially stable, the impact on company culture can be profound. Employees may begin to question their job security, leading to a culture of fear rather than one of innovation and collaboration. Vembu’s comments serve as a reminder that a healthy corporate culture is built on trust, transparency, and mutual respect.

Leadership plays a crucial role in shaping company culture and values. Vembu’s assertion that companies should prioritize their employees is a call to action for leaders to adopt a more compassionate approach to business. By fostering an environment where employees feel valued and secure, leaders can create a culture that encourages loyalty and long-term commitment.

A Call for Change

Sridhar Vembu’s candid critique of tech giants prioritizing shareholder interests over employee welfare serves as a powerful reminder of the ethical responsibilities that come with corporate success. As companies navigate the complexities of the modern business landscape, they must prioritize the well-being of their employees while balancing the interests of shareholders. Naked greed serves no one, and we’ll let Vembu have the last word; “We put our customers and employees first. Shareholders should come last.”