Inside Zoho’s metamorphosis into a software++ company


Vidhya Sivaramakrishnan

18 reads

Vidhya Sivaramakrishnan

18 reads

Over a quarter century after it began operations, bootstrapped Indian SaaS major Zoho is looking to go from a software-only company to a software, AI, and hardware player all at once. Powering this transformation is the company’s well-oiled R&D engine, an anomaly in India’s software space.

October 03, 2023


Key Takeaways

According to Zoho founder and CEO Sridhar Vembu, the company spends 3X more on R&D than it does on marketing

These efforts, though, aren’t just on the software side. Increasingly, Zoho is channelling its R&D focus towards hardware as well

The company is already working on building data centre storage racks and intends to move on to other hardware used in data centres

Beyond this, the company is also investing heavily in its AI R&D, while also investing in companies in various sectors that also put a premium on R&D

While Zoho founder and CEO Sridhar Vembu is vocal about many things, there are few issues he speaks about with as much conviction as the need for India—and especially its private sector—to invest heavily in research and development (R&D). 

In interviews and speeches, Vembu has stressed that R&D has been critical to Zoho’s growth, helping the company become the only bootstrapped Indian software-as-a-service (SaaS) startup to reach $1 billion in annual revenue. Last month, Zoho’s suite of 55-plus products also crossed 100 million users. According to Vembu, Zoho’s R&D spending is about 3X its expenses on marketing. This has been consistent over the years, says Ramprakash Ramamoorthy, Director of AI Research at Zoho and ManageEngine (Zoho’s IT management division).

Zoho’s organised R&D efforts began back in 2015 when the company set up its Zoho Labs department. The first team formed within Zoho Lab was dedicated to better understanding the databases that formed the foundation of Zoho’s business. “Any enterprise software company is a database company. It was more like we were a car manufacturer that did not know anything about the engine. So, we were technically building layers around a database and selling it, but we didn't know anything about the database,” explains Ramamoorthy.

Today, Zoho has replaced all of its commercial enterprise database subscriptions with its homegrown database, which now powers all of the company’s workflows. The savings on external database subscription licences, Ramamoorthy claims, have been passed on to the customers.

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