Zoho Corp puts customer-facing talent ahead of developers in hiring

After decades under founder Sridhar Vembu, Zoho Corp is entering a new chapter. Chief Executive Shailesh Davey and ManageEngine head Rajesh Ganesan are charting the $1 billion-plus SaaS player’s next act — pushing into larger enterprises, doubling down on rural India for talent, and threading AI into its sprawling product suite — all while trying to preserve the startup ethos that made Zoho one of India’s rare global tech success stories.

The two sat down with The Federal to discuss leadership transition, growth, and the road ahead.

Edited excerpts:

You’ve just taken over as CEO of Zoho Corp after Sridhar Vembu’s long and defining tenure. What does this leadership transition mean for you personally, and what will continuity versus change look like under your watch?

Shailesh: Sridhar has been CEO for more than 20 years, and most of our initial growth happened under his leadership. Now, the next generation of leadership is taking over, which really shows the depth in leadership that we have.

Regarding my own style, a lot of people ask me about it, and I often liken it to a cricket analogy. Sridhar bats like (Virender) Sehwag, while I’m more in the (Rahul) Dravid mode. I focus on the team process and on looking at where the future is going. It’s not that I jump into something and act immediately — I plan and consider things over a longer time frame. That is the way I am.

When it comes to the kind of change this represents, most of us have worked together for a long time. Me and Rajesh, for example, have worked together for 28 years. We know each other’s strengths and weaknesses, and the same is true for Mani. Given this, we understand leadership well and are able to complement each other. This makes the transition smoother than what you would typically see elsewhere.

As for our big focus areas, we have come a long way. We are now a billion-dollar-plus company, and the next step is launching the next phase of growth. One key area is moving into mid and large enterprises, which requires different kinds of organisational anticipation and preparation. This will be a major focus.

While we can’t always call ourselves a startup, we like to say we are a “25-year-old startup” — always 16 at heart. However, customer expectations have grown, both from outside and within the organisation. Meeting these expectations will be a major focus over the next couple of years.

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You’ve been with ManageEngine for over two decades, moving from engineer to CEO. What was the most defining moment that shaped your leadership style?

Rajesh: Not that this is not good, but if you ask about one particular defining moment, it’s very hard to define. As we spoke, the company is 28 years old, and ManageEngine itself is 23 years old. I’m also not the kind of person who sits under a tree and gets enlightenment. I am a person who evolved, starting as an engineer. You begin as a programmer, a developer for three years, and then you want to try something else.

The environment inside the company allowed that. The autonomy was there. I wanted to try my hand at documentation, product management, customer support, marketing. I have written copies for the website, helped with documentation. Recently, I spent a lot of time with the sales teams. So, there has been no one particular defining moment — it is about getting into the details, knowing what it takes, and how things happen. This deep understanding is very important for a leader.

I pick traits from people I get inspired by, whether it is Shailesh, Sridhar, or Kumar Vembu. I also look up to people like Satya Narayana, who talk about this idea of empathy — how you put yourself aside and think like people in the team. How they think. A person joining ManageEngine today, or Zoho Corp today, is not joining a startup with 20 people—they come with expectations of an 18,000-person company, a billion-dollar company. Their aspirations are different. How am I able to work with them as opposed to someone who has spent 27 years with me? That empathy is what I have understood and am still trying to develop.

Interestingly, even yesterday, I was telling a teammate that when you talk one-on-one, the conversation tone is different. When you are in a meeting, the conversation tone is entirely different. When they send you a text message in a group, it is different; when they send it personally, it is different. People read it in their own tone when 10 people message them — that is not empathy. When you read a text message in a group, you should read what they meant. When they send it one-on-one, you should read it in the tone they intended. Empathy, I would say, is one trait I try hard to develop and follow, among many other things that you need as a leader.

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You’ve pioneered setting up offices in rural India, away from the usual tech hubs. What has surprised you most about talent and innovation emerging from these smaller towns?

Shailesh: One of the defining traits I would say as a company is to serve the underserved. That is one underlying philosophy: don’t rush into places where everybody else is rushing, because otherwise you will again be competing with them. Be it talent, be it how you make the product, or how you market it, in all these cases we define the ground in which we want to play. That is the way I look at it.

If you were to look at talent, it is a combination of both necessity as well as this underlying trait. Necessity — like initially, when we started, people wouldn’t even know our name, so they would think twice before joining. I am talking about 1996, 1997. Now it is a different game. People know about Zoho, so now you have to be doubly careful. We don’t want people to join because Zoho is a cool name; we want people to join because they want to make a company great — not join a great company, as somebody was saying. That is very important.

We always look at both necessity and as a way of defining something back to society. Right from the beginning, we used to go to a lot of tier 2 and tier 3 colleges. We used to have all our interviews in Tamil, Hindi, Telugu, or Malayalam — whichever made the person sitting opposite more comfortable. That is how we started.

In 2004, we also started the Zoho Schools, where we took people from disadvantaged backgrounds and provided a meaningful alternative to college education. We trained them, gave them a stipend, and then absorbed them into the workforce. I believe that as a country, there is a lot of talent outside the cities. Now, GCCs are opening in tier 2 towns, and soon tier 3 towns, and so on. There is a lot of talent, but this talent has to be trained — it’s not easily pluggable.

We always say you hire for the next year. You take them, put them in a team, train them for three to six months, let them work on small tools or features in the product, and then slowly evolve them to the next level. It doesn’t matter which function — marketing, support, or product. You start with small things, get them reviewed, and then move to bigger responsibilities. This whole process usually takes about a year.

What this also creates is joy for the person coming in — they feel trusted, see their leads working with them, and helping them learn. This creates a bond, which also helps in retention. It meets the bigger goal of giving back to society. More importantly, employees now have a choice. Before, if you wanted to work in a tech company, you had to leave your town or city. Now, at least there is a choice. If they want to stay where they are, that is possible. If they want to move to Bangalore, Mumbai, or elsewhere, that is also possible. That is how I think we have evolved over time.

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AI is the buzzword of the decade. Beyond the hype, what’s the most practical way you see AI transforming enterprise IT and productivity tools?

Rajesh: Okay, I mean, it is real hype today. But what I have seen — our own consumption of AI, and the fact that we are also building AI technology — that is on one side. On the other side, my conversations with customers around the world show that it has moved beyond just being hype; it has started delivering value.

In our personal lives, it’s absolutely clear. We use AI on a daily basis, we rely on it — it’s a lot more accurate, very useful, and makes us very productive. You apply it in the context of business, and there is a lot more rigidity because a lot more is at stake. It’s no longer just for personal use. You have to comply with various regulations, worry about cybersecurity, privacy, and all of that. This is where people are still not able to move forward at the pace they would want.

In terms of technology functions today, we are a technology company — we develop technology, write a lot of software, and support that with many functions. From marketing, sales, and legal functions, we have started using AI, and it is already demonstrating value — to the extent of saving 30 per cent. And the promise is that it will reach 50 to 60 per cent very soon.

Looking at customers, especially in enterprise IT, they know the value. What is stopping them? The roadblocks are the lack of clarity about how to apply AI in the context of business while staying compliant. For example, in our own company, we are debating and having discussions with our legal team. Soon, the European Union AI Act will bring a lot of regulations on how AI is applied in business. Once this comes in, it will require you to demonstrate that your use of AI is ethical, free of bias, and does not breach any privacy of employees. How do you do this?

On one side, we have all the powers of AI; on the other side, we have guardrails positively — or roadblocks negatively. This is still in limbo. But I am an optimist — a technology optimist. We will be using AI a lot, and we will find solutions for all these problems. Any business, regardless of size, location, or vertical, unless it uses AI, is going to be left far, far behind. That is my conviction today.

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Where do you see AI’s impact on the SaaS business? Heavyweights like Salesforce have already laid off many employees, reflecting significant productivity gains. Do you think SaaS could face major disruption, with potential layoffs, once agentic AI comes in?

Shailesh: First of all, I want to remove the question of layoffs. What I see is that there was some overhiring in 2022-23 during the COVID times. So it’s difficult to differentiate between layoffs happening because of overhiring versus because of AI.

From a SaaS perspective, there are 3-4 functions within a SaaS company I focus on. I’m not looking at the customer side first; I’m looking at the “manufacturing” side — the company producing the SaaS software, like Zoho, Salesforce, or others. Naturally, the first use of AI is for internal functions like coding and testing. We use AI a lot, and we are measuring the gains. Personally, I use it daily — for learning something or explaining existing knowledge —it provides a lot of value.

When generating something new, like writing a feature, you still need to understand the code yourself. If a problem occurs in production, you can’t just throw it back to AI to fix — it might affect other areas. We’ve seen 20-30 per cent efficiency gains in coding, but it comes at a cost.

For me personally, before AI, learning something meant searching in 10 places, reading all the documents, and spending at least two hours. Now, it all comes neatly in a chat interface — but in a couple of days, I might forget it. So what I do now is a POC — a proof of concept — so learning alone isn’t enough. If you don’t apply it, you forget it. Even with AI, the time spent is roughly 60 per cent of what it was before, but you lose the breadth of different opinions you would have gathered before.

From the SaaS industry perspective, we ourselves use AI for marketing, coding, and support. As a company, we are cautious about hiring developers, but we are hiring more in customer-facing functions because understanding the customer and providing value still requires human connection. In development, production, and testing, we are careful about overhiring.

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In IT management, the threat landscape is changing rapidly. Do you think enterprises are underestimating insider threats compared to external hackers?

Rajesh: You use the word “underestimate”, but I don’t think that is the case. Let’s take India as an example. Over the last five years, we have had some good regulations, and digital maturity is quite high. Companies now have specific roles, like Chief Information Security Officers (CISOs), who are aware of the possibilities of insider threats.

But one thing I see is how the company treats cybersecurity — like how we treat our personal health. They know what could happen, but there is a sense of denial: “This wouldn’t happen to us”. More than underestimating, I see denial. When it comes to stakeholders, their priorities are elsewhere, and denial becomes a stronger and more dangerous situation than underestimating.

Now companies know about the risks, yet they still struggle to convince management and their teams. To be very honest, it was a struggle even inside Zoho Corp to educate every person that security is important. We have made a lot of progress, but this is a challenge for many companies.

We are a global business — we understand regulations, security, and we build cybersecurity products ourselves — so our situation is a little different. When I speak to enterprises in other verticals, like manufacturing or hospitality, the CISOs know everything. They don’t underestimate; they know what to do and are clear on what they need to comply with. But oftentimes, they don’t get the budget, the backing, or the talent. These are the real challenges today.

With every productivity tool layering AI, what will make Zoho’s approach stand out in such a crowded market?

Shailesh: As a platform, the depth we have and how we are putting all this together to provide an integrated solution is what sets us apart. If you look at it on a per-feature basis, it’s very hard to differentiate in a SaaS world. One company might have something, the competition might have something different — plus or minus a feature. So we don’t differentiate only on that.

What we actually differentiate on is the depth of the products we have. Be it ManageEngine or Zoho, we believe we are like a one-stop shop. ManageEngine focuses on IT management, and Zoho focuses on business workflows. For a business, you have sales, marketing, HR, and finance — everything you need to run your operations is available from Zoho. Similarly, for IT management, everything you need — service desk, IT monitoring, endpoint management, active directory, security — is available from Zoho and ManageEngine.

The bigger point is that we are not looking at comparing one particular feature to another. The more important consideration is the depth and breadth of solutions, how we integrate everything together, and how much value we provide.

We also take a very long-term view. Being a private company, with growth driven by internal approvals, we don’t have much external pressure. We look at the whole thing as a marathon, not a sprint. This means that when some AI comes in, we ask: is this hype or does it add real value? And if it adds value, how do we deliver it in the most effective way to the customer?

We are willing to look at it from a long-term perspective, do the marathon, and provide value to the customer. We are in a different world right now — a quite disruptive world, I would say.

With geopolitics pushing data localisation and sovereign cloud policies, how do you design a truly global SaaS business?

Shailesh: This whole issue about data sovereignty, with every government asking how we are helping their citizens, is becoming critical. Towards this, since pre-COVID, we had opened offices around the globe. In all these respective countries, we also have data centres running locally.

Our SaaS software runs out of these data centres, and the data resides within the respective country. All operations are compliant with the rules and regulations, privacy, and security requirements of that country. I believe this model will be the way forward — SaaS running locally in each country, supported and enhanced by employees from the respective offices.

This is something we foresaw back in 2018 and 2019. Towards that, we have opened around 20 offices worldwide, with close to 15 per cent of employees located in different parts of the world. In each office, the SaaS software runs locally and is fully compliant with the local laws. I think this is how the industry will evolve.

Customers increasingly demand integrated platforms instead of juggling multiple SaaS vendors. Do you see the future moving towards all-in-one suites like Zoho, or best-of-breed specialised tools?

Rajesh: I will say absolutely yes, because that’s the conviction with which we are building both Zoho and ManageEngine — an end-to-end, integrated suite of products. Now, we are also talking about how it will be a flexible platform.

It’s not just some out-of-the-box features, because every business is different and their needs are very unique. You take what is available out-of-the-box, but at the same time, without spending a lot of effort, how can they customise it? How flexible is our platform? We are already thinking about that.

We already have the conviction that it has to be one suite. You cannot focus only on being best-of-breed for one function; you have to think end-to-end. We have made a lot of progress, and we continue to ask: how can we improve on that? That is what is driving both ManageEngine and Zoho today. So, to answer your question: absolutely yes.

Shailesh: I think in SMBs, companies may prefer to go with a single vendor. But in larger enterprises — as Rajesh was alluding to — there may be multiple points of decision-making, and department heads might want different sets of tools.

The way we are looking at it is through breadth, depth, and integration. In all three areas, we put in the effort. So even if someone wants to pick the best solution available, that option is there. And if someone wants to go all in with Zoho, that option is also available. These two kinds of access, I would say, are what drive our development.

Indian SaaS is estimated to become a $50B+ industry by 2030, what role do you see Zoho and ManageEngine playing in that journey?

Shailesh: With AI coming in and geopolitical requirements emerging, some of these — what should I say — predictions will have to be looked at more closely.

As I said before, we are in a marathon race, so we will surely continue to exist. Hopefully, we will have grown better, bigger, and, more importantly, by the time AI matures, we will know how much we have harnessed it. I believe we will remain one of the largest product companies out of India, and I think that will continue going forward.

At the same time, newer technologies will emerge — especially this agent tech you mentioned. How to navigate it? Will agent tech become commonplace in the enterprise world, or used only in specific scenarios? I think it’s not yet fully desired, so there are many possibilities.

We are looking at it closely and have launched our own agent tech platform. The idea is to explore it, see where it can be applied, and understand its potential. The next three to four years are going to be very interesting times—that’s how we look at it.

Any internal targets that you have set for Zoho Corp?

Shailesh: That is one interesting thing — we have never set targets for ourselves. At a sales level, of course, there are targets, because sales teams need motivation through numbers.

Otherwise, we don’t look at it as having to reach a specific number by a certain time. We do give our best, and we know there are many factors beyond our control. You cannot guarantee success, but you can put in the work and the effort so that you deserve the success. That is the kind of approach we follow.

Outside of work, what’s one non-tech habit or hobby that keeps you grounded as leaders?

Shailesh: So yeah, a lot of reading — not necessarily tech reading. It could be history, culture, religion, business books — whatever — because that gives you perspective. Especially reading about history. Sometimes you feel, “Oh, this is some unique problem that only I am facing.” But when you read about the past, you realise it has happened before, and people have navigated it in different ways.

You also read about some of the innovators and how industries evolved. This helps put things in perspective. I think reading a lot of things outside of tech is one thing that gives me the wherewithal to deal with what’s happening in today’s life.

Rajesh: Of course, it comes with some reading, if not to the levels of Shailesh. I’ve never really separated work and life. I used to pursue music — we had a band — and even that was part of Zoho. I used to joke that it was one other product team I was managing.

In the last four years, my role requires me to travel about 26 weeks a year, which is almost two weeks every month. That has become a habit now. What I observe is that it has opened me up to a lot of things and helped in my own evolution. I use that opportunity almost as one of my hobbies. That’s how it has become.