Zoho Founder Sridhar Vembu: ‘Falling Software Stocks Are a Golden Opportunity for Indian IT’

Zoho founder on why he sees huge opportunity for Indian IT companies

While Wall Street panics over plummeting software stock prices, Sridhar Vembu—the visionary founder of Zoho—is calmly sharpening his pencils. In a recent interview, Vembu declared that the current market correction isn’t a downturn, but a long-overdue reckoning that opens a “huge opportunity for Indian IT companies” to reshape the global enterprise software landscape [[1]].

His argument is both contrarian and compelling. For years, Western software giants traded at astronomical price-to-earnings (P/E) ratios, fueled by hype rather than sustainable business models. Now, as these valuations collapse under the weight of economic reality and AI-driven disruption, Vembu sees a window for agile, cost-conscious Indian firms to step in with leaner, more efficient solutions. This isn’t just optimism—it’s a strategic blueprint for the next decade of tech dominance.

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Why Software Stocks Were ‘Massively Over-Valued’

Vembu doesn’t mince words. He argues that many mature enterprise software companies—particularly those in the CRM, ERP, and collaboration spaces—were trading at P/E ratios that defied logic. “Some were valued at 50x or even 100x earnings,” he noted. “That’s not based on fundamentals; it’s based on narrative and fear of missing out” [[1]].

This bubble was sustained by low interest rates and an assumption of perpetual growth. But as inflation rose and AI began automating core software functions, the illusion cracked. Customers started questioning whether they needed to pay $100+ per user per month for tools that could soon be replicated or replaced by more efficient, AI-native alternatives. The market is now correcting—not crashing, but returning to sanity.

The Indian IT Opportunity: A Market Reset

This correction, Vembu insists, is where Indian IT services firms can shine. Historically seen as back-office support or outsourced developers, companies like TCS, Infosys, HCL, and homegrown product firms like Zoho are now positioned to offer full-stack, end-to-end enterprise solutions at a fraction of the cost.

The key advantage? Cost discipline. Indian firms operate with leaner structures, lower overhead, and a focus on value over vanity metrics. As global CFOs look to slash bloated software budgets, they’re increasingly open to switching to reliable, feature-rich platforms from India that deliver 80% of the functionality at 30% of the price.

AI as the Great Equalizer (and Disruptor)

Artificial intelligence is accelerating this shift. Vembu believes AI will commoditize many high-margin features that once justified premium pricing. “Why pay millions for a custom analytics dashboard when an AI agent can generate real-time insights from your existing data?” he asks [[2]].

This democratization of capability levels the playing field. Indian firms, many of which have invested heavily in AI R&D, can now embed intelligent automation directly into their offerings—bypassing legacy architectures altogether. The result? Faster deployment, lower total cost of ownership, and greater adaptability for clients.

How Indian Firms Can Capitalize on ‘Cost Replacement’

Vembu frames the strategy as “cost replacement”—not just competing on price, but offering a superior value proposition:

  1. Bundle Services: Combine software, implementation, training, and support into a single, predictable monthly fee.
  2. Leverage Vertical Expertise: Build industry-specific solutions (e.g., for healthcare, manufacturing, or education) that address real pain points better than generic global tools.
  3. Own the Stack: Develop proprietary platforms (like Zoho’s 50+ integrated apps) to avoid dependency on third-party vendors and control the user experience.
  4. Focus on Long-Term Relationships: Prioritize customer success over quarterly sales targets, fostering loyalty and reducing churn.

This approach resonates with mid-market businesses and public sector organizations that have been priced out of the enterprise software elite.

Zoho’s Own Strategy: Walking the Talk

Zoho itself is the ultimate case study. Founded in 1996 and famously bootstrapped, the company has grown to over 15,000 employees and serves more than 100 million users worldwide—all without venture capital or a Silicon Valley address [[3]]. Its suite of integrated apps competes directly with Microsoft 365, Salesforce, and Google Workspace, often at half the cost.

Vembu credits this success to a philosophy of “frugal innovation” and deep technical sovereignty. By building its own AI models, data centers, and even chip designs, Zoho maintains control over its roadmap and pricing—a stark contrast to firms reliant on hyperscaler cloud costs that are now rising [[4]].

Conclusion: A New Era for Global Tech

Sridhar Vembu’s message is clear: the era of unchecked software bloat is ending. The Indian IT opportunity lies not in chasing the old playbook, but in redefining value for a post-hype, AI-driven world. As global enterprises seek resilience, efficiency, and affordability, Indian companies are uniquely positioned to lead—not just serve. The question isn’t if this shift will happen, but who will move fast enough to seize it. For more insights on India’s tech ascent, explore our [INTERNAL_LINK:indian-startup-ecosystem-analysis] coverage.

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