Can Afford $400-Million Buyback But Still 12% Layoff: Zoho’s Sridhar Vembu Calls Out Firm for ‘Naked Greed’
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Expressing disapproval of companies with large cash reserves that still opt for layoffs, Vembu described such actions as “naked greed”.
Sridhar Vembu said a company that holds around $1 billion in cash and reports a 20% growth rate, recently reduced its workforce by 12-13%.
In a pointed critique against companies favouring shareholders over employees, Zoho founder Sridhar Vembu has taken a strong stance against Freshworks’ recent decisions to lay off 660 employees while launching a $400 million stock buyback. Though he didn’t directly name Freshworks, Vembu’s posts on X (formerly Twitter) closely followed Freshworks’ financial actions, which resulted in a 28 per cent surge in its stock in the US market.
Expressing disapproval of companies with large cash reserves that still opt for layoffs, Vembu described such actions as “naked greed”. Freshworks, which holds around $1 billion in cash and reports a 20% growth rate, recently reduced its workforce by 12-13%.
Without taking Freshworks’ name, Vembu in a post on X 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, when it can afford $400 million in a stock buyback.”
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
Vembu went on to question Freshworks’ leadership, challenging their willingness to invest in new opportunities that might have preserved jobs for affected employees rather than boosting shareholder returns.
“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 don’t want anymore?” he asked, implying that Freshworks’ leaders may be “lacking in empathy.”
Vembu sees this as part of a concerning trend from the US, where he believes similar practices have led to employee cynicism. “This behavior, sadly, has become all too common in the US corporate world, and we are importing it in India. It has only resulted in large-scale employee cynicism in the US, and we are importing that too.”
Explaining Zoho’s philosophy, Vembu highlighted why Zoho remains a private company: “We put our customers and employees first. Shareholders should come last.”
Freshworks has not yet responded to Vembu’s remarks.
