Zoho Expands Rural Initiatives, To Replicate Tamil Nadu’s Hub & Spoke Model In UP

After starting two hub offices in Tiruppur and Trichy, Chennai-based Zoho Corporation plans to expand to Tirunelveli and Madurai districts of Tamil Nadu as well as one in Uttar Pradesh going forward.

In 2020, Zoho decided to follow a hub-and-spoke model of offices to cater to a distributed workforce, and as part of its ‘transnational localism’ strategy. The hub offices are ones that can accommodate 1000 or more employees, while the spoke offices are smaller offices of up to 100 employees. Eventually, each hub office will have a few spoke offices associated with it for infrastructure support and team collaboration.

The company currently has five hub offices, including one in Chennai, Tenkasi, and Renigunta, and around 30 spoke offices presently in India. Nearly 2000 employees are working from Zoho’s hub and spoke offices in villages and Tier-II/III towns, out of which about 1000 employees were hired locally.

Zoho’s Uttar Pradesh Expansion

Sridhar Vembu, cofounder and CEO of Zoho Corp. told Inc42 that the company would look at expanding to Uttar Pradesh in the second half of 2023. The Zoho team will be scouting for the right locations and towns in eastern and central UP.

Vembu also noted that the company does not want to set up an office in Noida or any other big cities in UP. “The Zoho hub office will be in eastern or central UP. I believe that this is a demographically-rich area for the next generation of talent and we want to replicate what we have done in Tamil Nadu in UP,” he added.

After identifying the hub office in UP, the SaaS giant will look at plans on how the spoke offices will be developed. While this model is mostly developed in Tamil Nadu, Zoho wants to take this to other parts of the country.

Zoho is also expanding its current facility of Kalaivani Kalvi Maiyam, a learning centre started during the pandemic for educating the young children from villages in and around Tenkasi.

“As much as we are technologists and have a robust Saas portfolio, it remains that business growth is not ceiling-less especially given the current economic backdrop and the speed at which technologies like Al evolve,” Vembu added.

Hence, for Zoho, it is important to focus on basics and stay grounded while also innovating and reinventing continuously to serve customers better. The company’s model of long-term investment in people and R&D will become more relevant if the economic crisis worsens, according to Vembu.

“The distributed workforce model reflects the idea of distributing growth and income across Tier 2/3 communities instead of urban concentration. Many of our product development teams today sit out of these hub and spoke offices, including some teams that are involved in deep-tech R&D. The long-term vision of these efforts is to create self-sufficient and economically prosperous rural communities” said Vembu.

Zoho’s Growth In The Previous Year

Founded in 1996 by Padma Shri awardee Vembu and Tony Thomas, Zoho was initially known as AdventNet INC. Sridhar Vembu-led Zoho posted a net profit of INR 2,749 Cr in the financial year 2021-22 (FY22), a 43% jump from INR 1,917 Cr in the previous year on the back of a strong growth in its business.

Total revenue grew 28.5% to INR 6,998.8 Cr in FY22 from INR 5,444.6 Cr in FY21. Sales, or operating revenue, zoomed 28% to INR 6,710.7 Cr from INR 5,229.6 Cr in FY21.

Earlier this year, the company also unveiled its unified communications platform, Trident. The unified platform combines mail, messages, audio/video calls, calendar, and tasks in one place.

In India, Zoho Workplace saw 33% year-over-year growth in 2022. Tamil Nadu, Uttar Pradesh, Maharashtra, Karnataka and Delhi are driving growth for the company. IT, retail, finance, manufacturing and real estate are its leading verticals.

As shared by Zoho earlier, the migrations from Google, Microsoft and GoDaddy to Zoho Workplace almost doubled globally in 2022. Interesignely, in India, the highest number of migrations were from Google to Zoho.