Zoho CEO Sridhar Vembu has ignited a fresh debate on the ethics of capitalism in India, following his recent remarks directed at Atomicwork CEO Vijay Rayapati. Vembu’s comments were in response to Rayapati’s statement about the lack of tolerance for capitalism in India, a country where businesses and individuals often benefit from the free-market system but express a cultural discomfort toward its principles. In an online exchange, Vembu urged Rayapati to “practise real capitalism,” drawing attention to what he sees as the responsibility of companies to prioritize employees and long-term stability over profit maximization.
The conversation began when Rayapati remarked on Vembu’s post about layoffs at Freshworks, a tech company that recently announced plans to reduce its workforce by over 600 employees. Vembu had openly criticized Freshworks’ decision, referring to the layoffs as a display of “naked greed,” a term that resonated with many in India’s workforce. Rayapati responded by noting that “capitalism isn’t tolerated” in India, sparking Vembu’s call for a more ethical, people-centered approach to capitalism that emphasizes responsibility over rapid financial gains.
Capitalism and Corporate Responsibility: Sridhar Vembu’s Vision
In his response, Vembu articulated his belief in what he describes as “real capitalism,” a concept he defines as building companies with a long-term vision and strong ethical values. For Vembu, real capitalism involves prioritizing employees’ welfare and fostering a workplace environment that values human capital as much as financial capital. “Real capital building works [by] taking care of your employees and building long-term successful companies,” Vembu stated, highlighting his view that a company’s duty extends beyond immediate profit and towards sustainable growth that benefits all stakeholders.
This is not the first time Vembu has vocalized his views on ethical business practices. As the head of Zoho, a privately held software company that has refused to seek outside funding or go public, Vembu has long championed a model of business that stands apart from traditional corporate practices. Zoho’s operations emphasize employee empowerment, community involvement, and a commitment to staying privately held, allowing the company to focus on long-term goals rather than quarterly profits. This philosophy of “real capitalism,” according to Vembu, is a key reason why Zoho has avoided mass layoffs and retained a stable workforce despite market fluctuations.
Freshworks Layoffs and the Debate Over “Naked Greed”
The immediate catalyst for Vembu’s comments was Freshworks’ announcement of significant layoffs, which the company justified as part of a restructuring process aimed at improving efficiency. Freshworks, a rival to Zoho, has been a success story in the Indian tech industry, growing rapidly and even going public on the NASDAQ in 2021. However, its decision to lay off 12-13% of its workforce has led to criticism from various quarters, with some arguing that the company’s approach reflects a prioritization of shareholders over employees.
Vembu’s criticism of Freshworks focused on what he saw as a lack of loyalty to employees. He argued that a company with significant cash reserves, reportedly over $1 billion, should have explored other avenues before resorting to layoffs. “A company that has $1 billion cash… and is laying off 12-13% of its workforce shouldn’t expect any loyalty from its employees,” Vembu remarked, underlining the impact of such decisions on employee morale and company culture. For Vembu, this move exemplified what he referred to as “naked greed”—a prioritization of short-term profits and stock buybacks over the well-being of employees who contribute to the company’s success.
A Broader Critique of Corporate Culture in India
Vembu’s comments have sparked a broader conversation about corporate responsibility and the culture of capitalism in India. Critics argue that many Indian companies, particularly in the tech sector, are increasingly adopting Western business practices that emphasize aggressive expansion, rapid growth, and an unwavering focus on shareholder value. This approach, while profitable in the short term, often comes at the cost of job security, employee satisfaction, and long-term sustainability.
The recent layoffs at Freshworks have brought this issue to the forefront, highlighting the tension between profitability and ethical responsibility in corporate India. For Vembu and other advocates of “real capitalism,” the answer lies in a more balanced approach that values employees as stakeholders and places a greater emphasis on sustainable growth. “It is possible to build successful companies without compromising on ethics,” Vembu asserted, challenging the notion that layoffs and profit maximization are necessary components of corporate success.
Practicing “Real Capitalism” in a Competitive Market
Implementing Vembu’s vision of real capitalism, however, is not without challenges. In a highly competitive global market, Indian companies often feel pressure to keep up with international competitors who operate under different cultural and economic norms. The emphasis on profitability and shareholder value is a reality of the modern business landscape, and companies that fail to prioritize these aspects risk being left behind.
For Vembu, though, the answer is not to abandon capitalism but to practice it in a way that aligns with ethical values and social responsibility. This means investing in employees, fostering a strong company culture, and avoiding short-term fixes like layoffs, which can have long-lasting negative effects on both the company and its workforce. “Capitalism should not be about taking shortcuts to maximize profits,” Vembu argues. “It should be about building something meaningful and sustainable.”
The Role of Employee Loyalty and Long-Term Vision
One of the key components of Vembu’s philosophy is the idea that employee loyalty is crucial to a company’s long-term success. For Vembu, companies that treat their employees with respect and provide job security are more likely to build a loyal, dedicated workforce that contributes to sustained growth. Layoffs, he argues, undermine this loyalty and create a culture of fear and instability that ultimately harms the company’s prospects.
In contrast, Vembu’s approach at Zoho has been to prioritize employee satisfaction and job security, even during economic downturns. By remaining privately held, Zoho has been able to avoid the pressures of quarterly earnings reports and shareholder demands, allowing it to make decisions that prioritize long-term stability over short-term gains. This model, according to Vembu, is the essence of real capitalism—a system that values people as much as profits and seeks to build lasting institutions.
The Future of Capitalism in India: A New Model?
Vembu’s comments have sparked a wave of discussions in India’s corporate community, with some supporting his vision of real capitalism and others arguing that the pressures of the global market make such an approach unrealistic. However, as the Indian economy continues to grow and evolve, there is a growing recognition of the need for a more ethical, sustainable approach to business.
For Vembu, the future of capitalism in India lies in a model that balances profitability with social responsibility—a model that values employees as partners in the company’s success and seeks to build long-term relationships rather than maximizing immediate profits. “Real capitalism is about building something that lasts,” Vembu says. “It’s about creating value for everyone, not just shareholders.”
As India’s corporate landscape continues to change, Vembu’s vision of real capitalism offers a compelling alternative to the profit-driven models that dominate today’s market. Whether or not other companies will adopt this approach remains to be seen, but one thing is clear: Vembu’s comments have sparked a much-needed conversation about the role of ethics and responsibility in Indian business.