It’s a bit of an understatement that the coronavirus pandemic is all set to change the way businesses are run for a considerable period of time. What has worried many is whether tech firms will survive the fiscal onslaught or choose to let go of employees as a way of getting by these challenging times.
In a CNBC-TV18.com piece published earlier this month, Freshworks’ CEO Girish Mathrubootham wrote that the April-June quarter of 2020 would be the one to face the worst of the COVID-19 crisis — SaaS (Software as a Service) companies like his included.
“Businesses should expect to see both new and existing revenue impacted,” he wrote. “The good news is that SaaS businesses have some built-in advantages: since SaaS products are delivered over the internet and maintained in the cloud, they are easier to deploy and manage.”
Are layoffs likely?
While Freshworks says it has pledged not to lay off employees, it has hit pause on hiring with the exception of key positions in the company. However, competitor and SaaS major Zoho isn’t exactly ruling out the possibility of layoffs, even as a freeze on hiring has already been implemented.
“So far there have been no layoffs in the company, and we endeavour to keep things that way,” said Rajendran Dandapani, Director (Technology), Zoho Corp. “But never say ‘never’, when it comes to business; these are extremely unpredictable times.”
‘Urbanisation is not working’
The one big advantage that Zoho can claim for itself, especially during trying times like these, is its rural-first approach to setting up offices and hiring talent. “The one thing that the pandemic has taught is that urbanisation is not working,” added Dandapani. “Even when we start hiring later, we will try to follow a model where we move further away from urban centres, and create jobs in rural areas or smaller towns," he said.
Zoho currently has offices in small towns like Tenkasi in Tamil Nadu and Renigunta, Andhra Pradesh. Zoho’s commitments that have been made to new recruits are being honoured, as these employees have already begun working from home. For now, it’s working.
“Staying away from metropolises has ensured that infrastructure and other costs have been less,” Dandapani said, adding “We are also cutting our marketing expenditure and investing in deepening our own capabilities.” Freshworks has also outlined the need for “cost-conservation”.
Free tech, a huge relief
In trying economic times, a few tech firms have begun offering their products for free. Freshworks is no exception. “This is being done to help many small and medium businesses adapt better,” said Girish. “We have launched free chat and telephony offers to help these companies support their customers, while we build new apps to help existing customers.”
It isn’t just Freshworks. Chennai-based start-up GoFrugal has also taken a leaf out of this playbook, by offering two of its apps, OrderEasy and GoDeliver free of charge to kirana stores, for the first six months, in order to take online orders and deliver products. “To support these stores in such difficult times, we are offering free applications for the next six months to gain better business control, allowing them to do twice as much with the same resources,” said Kumar Vembu, Founder and CEO, GoFrugal.
Falling valuations?
There’s no denying that there may be some far-reaching consequences that COVID-19 may have on the SaaS ecosystem. Zoho believes that the pandemic may lead to VC money drying up and “inflated valuations” coming down. This is in line with what its founder Sridhar Vembu has maintained in the past.
One positive that can be derived from the crisis, though, is that although they may not be immune to the economic impact of the COVID-19 pandemic, the shield of the cloud and internet could protect SaaS companies from the worst.