The Chennai-based Zoho Corporation is confident in the ability of its “hub and spoke” development plan as it anticipates India moving up to become its third-largest market after the US and Europe.
The shift, which started in 2020 in Tenkasi, has had great results, according to Sridhar Vembu, Co-founder and CEO of Zoho Corp. This hub now employs close to 1,000 employees. He told the journalists here on Monday, “We will shortly extend it to house 3,000 resources.
Since the hub-and-spoke model is being implemented, the tiny enterprises that had been established prior to the pandemic will also be replicated in other locations. The search for a comparable hub is already underway in Uttar Pradesh, and the Zoho CEO is due to visit the Central and Eastern UP to choose a location. These areas are “demographically the richest,” according to Vembu, making them a prime location to find future talent.
In the last six months, it launched two “hub” offices in Tirupur and Trichy, and it has plans to create more in the Tamil Nadu districts of Tirunelveli and Madurai.
To accommodate a dispersed workforce and as part of its “transnational localism” approach of being locally rooted while remaining internationally linked, Zoho made the decision to use the hub-and-spoke model of offices. The spoke offices are smaller offices with up to 100 people, while the hub offices are ones with 1000 or more employees.
Each hub office will eventually be connected to a few spoke offices for infrastructure support and team communication. The firm now has 30 spoke offices in India and five hub offices, including ones in Chennai, Tenkasi, and Renigunta. Of the over 2000 people operating out of Zoho’s hub and spoke offices in Tier 2/3 towns and villages, around 1000 were employed locally.
According to Vembu, his “Senior Management Executives’ ‘ with decades of experience are eager to relocate from Metropolitan operations to such rural areas because of the “quality of life” and opportunities to get involved in community building they present. A product created from this centre, Zoho Desk, successfully contributes to Zoho’s six lakh total customers. Given that the business is “approaching the objective faster,” Vembu anticipates reaching the 1 million milestone in less than 1.5 years.
Speaking about the effects of spatial leverage, he asserted that even a location like Coimbatore will have quicker growth than Chennai. In addition to the Middle East (Jordan), nations including Nigeria, Colombia, Brazil, and Mexico, as well as India, are the “hottest expanding market.”
Vembu said that Zoho only spent roughly 20% on sales and marketing, in contrast to typical SaaS businesses that spend between 40% and 60% of their budgets on these activities. This temporary tradeoff for expansion has shown to be more fleeting in producing cloud income, he said.
He went on to say that whereas competitors like Salesforce produced over 65% of their revenues from the US, his company only received 38% of those revenues. Zoho’s diversification strategy has been successful.
He said that for Zoho, too, this was true, just as the GDP growth of all BRIC countries had for the first time surpassed that of the G7 nations. “Developed markets are considerably more lax. Japan is in a severe slump. “India, which today ranks third in terms of its share of global income, will rise to second place in three years, he said, and then, in seven to ten years, it would take the top spot, reflecting the significant change since India made up less than 2% of the world’s revenue 12 years ago.
He acknowledged that the company’s development had slowed, but claimed that things had improved since it was planning to recruit 100 workers in Mexico and open offices in Brazil and Colombia.