Zoho’s Unconventional Path: Building a Global Tech Giant from India’s Heartland

In an insightful conversation with Dataquest, CEO Sridhar Vembu outlines the company’s ambitious plans for semiconductor investment, emphasizing the importance of local fabrication facilities for national security and economic growth. Vembu’s vision extends beyond mere technological advancement; he advocates for a comprehensive approach that integrates rural development and talent nurturing, positioning Zoho as a key player in India’s journey toward becoming a global semiconductor powerhouse.

In conversation with Dataquest, CEO Sridhar Vembu outlines the company’s ambitious plans for semiconductor investment, emphasizing the importance of local fabrication facilities for national security and economic growth.

The man behind the global tech giant Zoho, offers a unique perspective on India’s burgeoning technology landscape. With Zoho’s roots firmly planted in India, Vembu has witnessed firsthand the nation’s transformation from a technology importer to a global exporter.

Zoho has been a significant player in India’s tech landscape. Can you share your thoughts on India’s journey to becoming a global technology hub, and how Zoho is contributing to this transformation?

Given our demographics and the fact that India has the largest youth population in the world—23 million babies were born this year alone—we have to be involved in every critical technology sector.

This means creating jobs, nurturing talent, and building capabilities. The Global Capability Centre (GCC) boom is a positive sign of our growing capabilities. However, I believe this growth must extend to rural areas as well. India’s vast population is spread out, so it’s crucial to create opportunities in rural regions.

At Zoho, we are committed to this vision, combining R&D with rural development. We’re bullish on this trend and are investing heavily in it.

AI has a huge potential, but it comes with resource demands, particularly in compute power. We’re making sure our investments are both efficient and effective.

In this context, the growth of Global Capability Centres (GCCs) is a very promising sign. It demonstrates our ability to build essential skills and capacities within India. However, while I’m optimistic about this trend, I also believe it’s crucial to extend these opportunities to rural areas. India is not just a handful of metropolitan cities; it’s a vast nation with a dispersed population. We must ensure that growth reaches the rural heartlands, too. At Zoho, we’re focused on driving this change by integrating research and development (R&D) with rural development. This is why we’ve been heavily investing in establishing rural hubs where talent can thrive closer to home.

How aggressively are you investing in R&D, and in which sectors do you see the most potential?

R&D has always been a core part of Zoho’s DNA. In fact, we’re one of the largest spenders on R&D as a percentage of revenue in our industry. Our investments span a wide array of technologies—everything from software to data centre innovations, server technology, and GPU optimization. We’re also venturing into adjacent fields such as drones, medical devices, and electric vehicles. Our goal is to build competencies in a variety of deep tech areas, which we believe will be critical for the future.

Zoho has a global presence, yet it remains rooted in India. How do you maintain those roots while expanding globally?

It’s true that while we are a global company with teams and clients spread across the world—be it the Middle East, Mexico, Brazil, or Southeast Asia—we are still very much rooted in India. Although a significant portion of our revenue comes from international markets, India remains our fastest-growing market.

We rely on our own digital platforms to connect with and manage teams worldwide. I travel frequently to meet with our teams, but what ties it all together is the use of our own technology to maintain this global-local balance. Zoho’s core values, culture, and approach are very much influenced by our roots in India, and we continue to grow that connection, even as we expand globally.

Zoho is primarily known as a SaaS company, but you’ve hinted at diversification. Can you tell us more about your investments beyond SaaS?

We are significantly diversifying into several high-impact areas. Apart from our SaaS offerings, we’ve made multiple investments in medical equipment, drones, robotics, and electric vehicles. For instance, just recently, Ultraviolet announced our investment in their electric vehicle technology. Any company working on critical technologies that align with our vision and where we see potential for growth—especially deep tech—is a potential partner for us. Of course, we have to be mindful of our scale, but wherever possible, we are keen to invest in these transformational technologies.

Speaking of transformational technologies, Google recently announced a $120 million investment in AI in India. What are your thoughts on AI in India, and how is Zoho positioning itself in this space?

AI is, without a doubt, a major area of focus. Right now, India isn’t leading in foundational AI models like some of the larger players, but we are making strides with smaller and mid-level models. At Zoho, we’re heavily investing in domain-specific models, which often outperform the larger foundational models because they are more tailored to specific industries or use cases.

We’re also exploring innovative ways to lower the cost of these models, both by foundational engineering and by diversifying our GPU options. AI has a huge potential, but it comes with resource demands, particularly in compute power. We’re making sure our investments are both efficient and effective.

High computational power means high energy consumption. How are you addressing the energy efficiency challenges, especially with your data centres?

You’re absolutely right—high-performance computing requires significant energy. But there’s a lot of room for optimization, especially in software deployed across data centres. This is not just limited to AI; even regular SaaS applications can be optimized to reduce energy consumption. At Zoho, we are working on making our technology stack more efficient, both in terms of the compute resources we use and the energy they consume. Energy efficiency is a critical area where the entire industry needs to focus.

You’ve mentioned interest in the semiconductor space as well. What’s your vision there, and how does the government’s Production Linked Incentive (PLI) scheme factor into your plans?

The PLI scheme is certainly a positive step, but it’s about more than just that. The government is rightly incentivizing the creation of semiconductor fabs in India. This is crucial for our country in terms of technology sovereignty, economic stability, and national security.

India, with its massive population and growing talent pool, is in a unique position to become a global leader in technology.

Zoho has an application pending in this area, and the government is evaluating it thoroughly. I welcome this scrutiny because it ensures that the right choices are made, and we remain committed to contributing to India’s semiconductor ambitions.

Data security and ethical AI are important topics today. What is Zoho’s approach to governance and compliance in these areas?

Data security is a top priority for us. We’re investing heavily in securing our systems and offering security tools to the market. When it comes to AI governance, our approach is quite conservative—we don’t co-mingle customer data to train models. Each model is tailored to a specific customer and only uses that customer’s data. Additionally, there’s a broader need for what I call a “truth engine” for AI. When you query a database, you expect the correct data to come out, but with large language models, the output isn’t always guaranteed to be accurate. This requires foundational research, and we’re actively working on it.

How is Zoho handling talent acquisition and retention, especially given the challenges in the tech industry?

We’ve always believed in nurturing talent rather than just acquiring it. Our focus has been on building talent through various initiatives, including our schools and incubation programs in rural areas. We invest heavily in training and development, and we take pride in growing our talent from the ground up.

As for layoffs, we’ve taken a pledge to avoid them as much as possible. Instead, we focus on redeploying our workforce to areas where we see emerging opportunities. It’s our responsibility to ensure that our people are continuously learning and evolving with the industry.

aanchalg@cybermedia.co.in