The Fifth Metro: Doing IT differently

Why Zoho is a rule-breaker in India’s technology capital

Written by Saritha Rai | Updated: November 24, 2014 12:25:25 am
Zoho is India’s largest IT products company. Zoho is India’s largest IT products company.

In a sector full of leaders with rockstar status, you could call him the most famous IT entrepreneur you’ve never heard of. Nattily dressed in a white dhoti and black kurta, Sridhar Vembu looks comfortable in his five-star hotel surroundings, but says he does not particularly care for such locations.

The co-founder of the successful IT products firm Zoho Corporation frets about the lack of reliable wifi at the venue where his firm is holding its first-ever Zoholics user conference for India. Vembu is a rebel in more ways than one.

In Bangalore, the centre of India’s technology universe, IT companies broke the old-economy mould to rewrite rules and create new, meritocratic companies. Bangalore-based Infosys, Wipro, MindTree and a raft of smaller companies have amassed customers and revenues, altering the rules of hiring, training and deploying Indian talent. Many of them helped re-brand India as a modern, skilled nation.

Keeping a low-profile in a sector full of standouts is Vembu, whose Chennai-based Zoho has turned its back on IT companies’ rulebook in many ways.

Vembu, a graduate from Indian Institute of Technology, Chennai and a PhD from Princeton, moved Zoho’s base from the Silicon Valley to India in 2009, way before “made in India” became a trendy term. The company’s tagline is “Made in India. Made for the world.”

Zoho is India’s largest IT products company. It makes a suite of cloud applications for business use. It builds network management tools for companies. Its products, such as Zoho and ManageEngine, are money spinners that compete with global giants like Microsoft and Salesforce.com. But, unusually, the firm, whose revenues are in the multiples of millions of dollars, was bootstrapped and has never accepted a single dollar of venture capital.

All these facets apart, Zoho is a true trendsetter in its hiring and people practices. At the core is its view that skill development is key to running a business and that good talent is groomed on the job. Vembu further says software is art, not code, it is emotion and not just logic. Only three out of Zoho’s 2,500 employees are IIT graduates, including two of its co-founders. But over 300 of its employees never even went to college. This year, another 100 non-college graduates will join the company, many of them first-generation white-collar workers. These include a 10th grade pass from Assam, who came to Zoho as a security guard but showed inordinate curiosity in using office computers. He will soon graduate from Zoho University, the company’s rigorous year-long training programme. Each year, Zoho fans out to rural as well as humble government-run schools to hire 12th graders to its one-year training programme. The trainees start earning from day one so as to ensure that they can start supporting themselves and their families. Zoho also hires so-called unemployable graduates — engineers who have been bypassed by TCS, Infosys and other big name IT companies — and puts them through its three-month paid incubation programme.

Vembu scoffs at Google’s “how many golf balls can fit into a jumbo jet” hiring methodology and says interviews can only produce static snapshots of people.

At the end of the three months’ incubation, its hit rate is 60 per cent. There is no correlation between academic credentials and job performance, says Vembu. Employees are not required to bring their academic certificates and/ or past credentials to job interviews.

Zoho says its HR department is not a marketing tool that sells the bean bags-free lunches-jeans dress code idea of working in a technology company to potential employees. The department is small, consisting of less than 10 people. They mainly facilitate employees’ wellbeing. For instance, if an employee’s family member needs emergency hospitalisation, the HR staff arranges a cash loan. The HR team attends employee nuptials bearing the company’s wedding gift.

Despite the lack of fanfare, Zoho’s low attrition rates are the envy of brand-name IT companies. Many of Zoho’s employees have never worked for any other company; they started at Zoho and stayed on. It is expanding, not in Bangalore or another big city, but in Tenkasi, a Tamil Nadu town of 70,000 people, where it has set up operations in a warehouse that used to house fruit-pulping machines.

The self-effacing Vembu has built an IT products company rather than choosing to tread on the worn IT services path. Like many of its Silicon Valley peers, Zoho started out of a bedroom in a Chennai house. Vembu talks of turning it into a billion-dollar-in-revenues company, but he vehemently says the firm will not do
a public listing. The quarter to quarter existence is not for rule-breaker Zoho.

saritha.rai@expressindia.com

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