Understand layoffs when struggling but this naked greed: Zoho CEO lashes out at company for reducing workforce by 13%

Amid rising cases of reduction in workforces globally, Zoho CEO Sridhar Vembu recently lashed out at Freshworks, thought he didn't share the name, for being a company with ‘$1 billion cash’ for laying off 12-13% of its workforce.

Although Vembu doesn’t mention the company by name in his X post, it’s implied that he is referring to Software as a Service (SaaS) company Freshworks that recently announced to cut 13% or 660 jobs.

Announcing the layoffs in a SEC filing, Freshworks also said that its board of directors approved a $400 million share buyback programme of its outstanding Class A common stock. In his post, Zoho CEO mentioned the $400 million buyback in stock, implying that the company he is talking about is Freshworks.

"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 buy back," said the CEO.

Further talking on layoffs, the CEO said "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. Here is a critical question to its leadership: 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?"

" 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. This is why choose to remain private. We put our customers and employees first. Shareholders should come last," said Sridhar.

What did Freshworks do?

Nasdaq-listed software-as-a-service (SaaS) major Freshworks is reducing its workforce by 13%, impacting about 660 employees globally, as part of its efforts to streamline operations, the company's CEO Dennis Woodside wrote in a letter to the company's staff. The firm currently has a workforce of more than 5,000 employees.

The layoffs will impact Freshworks staff across the US, India and its other locations.

Freshworks also announced that its board of directors has approved a $400-million share buyback programme but did not detail a timeline for this exercise.

“In November 2024, the company committed to a restructuring plan (the plan) to better align the company's talent with its strategic priorities and to improve operating efficiency. The company estimates that this will result in approximately 13% reduction in headcount and approximately $11 million to $13 million in charges in the fourth quarter of 2024, consisting primarily of cash expenditures for separation-related payments, employee benefits and related costs,” Woodside wrote in the letter, which was published by Freshworks in a regulatory filing with the US Securities and Exchange Commission (SEC).

(with ToI inputs)