Unleashing Potential: Zoho Identifies India as a Thriving Hub for Rapidly Accelerating Enterprise Deals
India’s largest privately held tech services firm, Zoho Corp., anticipates that the country’s small businesses and enterprises will collectively generate over $1 billion in revenue over the next five fiscal years. This bold prediction comes from the new Chief Executive, Mani Vembu, who shared insights during an interview with Mint on Thursday.
Vembu, who succeeded his brother Sreedhar Vembu after he stepped down to become the “chief scientist” of the Zoho group earlier this year, highlighted the burgeoning demand for digital services among over 63 million small and medium-sized businesses (SMBs) in India. “With the evolving story of India, we expect business growth in this sector to exceed 30% year-on-year for the next five fiscals,” Vembu stated. He noted that revenue from Indian operations has seen compounded annual growth of 51% over the last decade, now contributing 15% to the company’s overall revenue.
Competing against established players like LTIMindtree, Mphasis, and Coforge, Zoho is carving a niche as India’s premier tech services provider. In FY23, Zoho reported its group revenue surpassed the $1 billion mark, although it has yet to release financial specifics for FY24 and FY25. Notably, while North America remains a significant revenue source, accounting for nearly half of Zoho’s earnings, it is currently experiencing slowdowns due to inflation and shifting technological landscapes driven by artificial intelligence.
Recent performance trends indicate a downturn for several leading Indian IT firms, with four of the top five reporting quarterly revenue declines attributed to weakness in the North American market. However, India has shown itself capable of securing substantial contracts, as evidenced by Tata Consultancy Services’ $1.83 billion deal with Bharat Sanchar Nigam Ltd in May 2023.
Analyzing the evolving landscape, industry experts have noted a growing trend of companies aiming to enhance revenue generation from India-an area previously considered relatively muted for IT services. Akshay Khanna, managing partner at tech consulting firm Avasant, remarked, “India has not contributed significantly so far, but there’s been a shift, even though it still represents less than 10% of the industry’s net revenue.” He emphasized the importance of timing in capturing potential growth among SMBs, indicating that these smaller firms could evolve into larger enterprises.
Vembu disclosed that under Sreedhar’s leadership, Zoho invests up to 35% of its revenue in research and development. This commitment was further showcased on Thursday with the launch of their 7 billion-parameter large language model, aimed at enhancing Zoho’s software offerings while replacing third-party models like OpenAI’s GPT and Google’s Gemini.
A senior equity analyst from a Mumbai-based brokerage, who requested anonymity, suggested that Zoho’s strategic moves are designed to optimize profit margins in an increasingly competitive tech services arena. “Zoho enjoyed consistent growth until FY23 but has shifted to a focus on India, which may allow it to leap ahead of peers in capturing small businesses undergoing digital transformation,” the analyst noted.
Despite these advancements, Mint could not independently verify Vembu’s claims regarding R&D spending. Zoho had earlier acquired Asimov Robotics but has recently scaled back ambitions in battery manufacturing and semiconductors due to challenges in technical expertise and product-market alignment.
In summary, as Zoho Corp. positions itself for significant revenue growth through the Indian SMB sector, it marks a pivotal moment in the firm’s evolution and the broader tech landscape in India.
Original Source: https://www.livemint.com/news/zoho-sees-india-as-fastest-growing-market-as-enterprise-deals-accelerate-coforge-inflation-mphasis-it-firms-asimov-vembu-11752749735509.html
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Publish Date: 2025-07-18 05:40:00
