Sridhar Vembu Criticises Corporate Greed and Layoffs at Freshworks

Sridhar Vembu, founder of Zoho, has sharply criticised companies that engage in stock buybacks while laying off employees. In recent posts on X (formerly Twitter), he specifically called out Freshworks, an Indian SaaS company, for its decision to reduce its workforce by 13%, despite reporting strong financial results. Vembu’s criticism highlights a crucial debate: should companies prioritise shareholders over the well-being of their employees?

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Sridhar Vembu Slams Corporate Greed: A Wake-Up Call for Freshworks and Beyond

Vembu’s message is blunt: when a company has significant cash reserves and strong growth but still lays off staff, the motivation is not financial distress but “naked greed.” Despite a 28% surge in its share price, strong Q3 results, and an optimistic forecast, Freshworks revealed plans to lay off 660 employees while simultaneously announcing a $400 million stock buyback. For Vembu, this reflects a corporate culture that values shareholder returns over the people who drive a company's success.

Vembu also criticises this trend in the broader tech industry, particularly in the U.S., where companies, in his view, betray their workforce for short-term financial gains. He contrasts this with Nvidia and AMD, which succeeded by focusing on long-term talent retention, investing in engineers who remained loyal through tough times.

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Freshworks: A Case of Short-Termism

Freshworks’ financial performance paints a picture of a healthy company. It reported a 22% increase in revenue to $186.6 million, surpassing profit estimates. Yet, the decision to lay off employees amid this growth deepens the cynicism surrounding corporate priorities. Freshworks’ actions—layoffs coupled with stock buybacks—raise ethical concerns, particularly when compared to companies that reinvest their profits into their workforce.

Embracing True Capitalism

Vembu does not just criticise; he offers a vision of better business practices. He warns against importing U.S. corporate models into India, stressing that true capitalism is about more than shareholder returns. It’s about caring for the people who make a company successful.

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At Zoho, Vembu has avoided the pressures of Wall Street by staying private, enabling long-term focus on employees and customers. This has helped Zoho build a loyal workforce and customer base, demonstrating that prioritising people can deliver sustainable growth.

Vembu advocates for exploring alternatives to layoffs, pointing to the growing employee scepticism in the tech sector. Instead of reducing staff, companies should consider innovation, new business lines, or new opportunities to sustain their workforce.

A Call for Ethical Capitalism: Prioritising People Over Profits

Sridhar Vembu’s critique is a powerful call for ethical business practices. He argues that capitalism should not only deliver profits but also prioritise employees—those who are essential to a company’s long-term success. While stock buybacks and layoffs may offer short-term financial relief, they can undermine trust and damage a company’s core asset: its people.

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Vembu’s message should serve as a wake-up call to companies, both in India and globally. Zoho’s example proves that businesses can be both ethical and profitable by focusing on long-term relationships with employees, rather than succumbing to the pressures of short-term gains. The corporate world must now consider whether its future lies in genuine capitalism, where people come first.