SaaS major bets on India for high returns

The California-based executive spoke on the changing dynamics of the IT environment in economies like India and offered insights into market trends. 

If you were going to start a tech company, for the last 30 years, the notion was you had to be in Silicon Valley. The US arm of our company was started in the Bay Area. But we opted right from the start not to be in Silicon Valley. We started our offices in a small town called Pleasanton, about 40 minutes north of Silicon Valley. We asked ourselves why pay a premium to live in the Valley. There is no magic that is going to make your product better because you had an address in Mountain View or Sunnyvale as opposed to Pleasanton. We asked questions most people took for granted and assumed as norms. 

In stages of forming a company, we were in a low-cost area, where we could put our investment into the product, its development, and solving problems for customers as opposed to paying rent. Is there any need for us to be in Bengaluru or Hyderabad or New Delhi? We could do this in Chennai or Tenkasi. Start-ups in the US are continuing to pay $80100 per square foot for space in San Francisco to attract top talent i.e. mercenaries who may stay with you for two years and then jump on to the next best offer. 

Our culture perpetuates spending a career here. Our managers have about 15 years of experience, something Microsoft or Google cannot lay claim to. To get that kind of domain expertise for 10 or 15 years is incredible. 

The mentality with Zoho was that you don’t need IT. We were appealing to small businesses that didn’t have the wherewithal to have an IT division. ManageEngine was catering to IT firms – by definition, these were larger customers who had IT divisions. Over time, more and more tech decisions were being driven by the businesses themselves – sales, finance, marketing, retail etc. IT was being relegated to a second-class decision maker on technology. And we were selling both biz applications and IT. Today, ManageEngine is a bigger business than Zoho – revenue wise. It’s been around longer – from 2002 to 2003. It was strictly focussed on IT Management. Around 2005, we began introducing cloud based business applications. 

Later, our biz app customers started demanding technologies like Active Directory, Password Management, Two-factor Authorisation, mobile application technologies, which was part of ManageEngine. So now, we have a lot of synergies and bi-directional technology flow. India is one of our highest growth markets. So, we are making big investments here. 

Zoho Finance Plus team has been fully focused on GST for the past 18 months, developing solutions just for India. As much as 40 per cent of the company’s revenues  are invested back into R&D. Less than 20 per cent goes to sales and marketing. The big investments are on machine learning, artificial intelligence. We recently introduced Zia, (Zoho Intelligent Assistant). We were in the IoT business even before it was called that. We developed Web NMS (Network Management System) technology, which are still used by huge telecom companies to instrument their modems, their network equipment. 

We will incorporate technologies like IoT into our CRM app. Field service vertical applications will be an area of focus. We have an application developed for auto garages. IT helps them instrument their customers’ cars such that they know when they need an oil change, when the engines need servicing and more.