Global economy is taking a turn for the worse says Zoho’s CEO Sridhar Vembu

The Russia-Ukraine war and its impact on supply chains, high inflation rates, and the US Federal Reserve’s aggressive interest rate hikes are causing fears of a recession in the US, adding to the sector’s worries.

Software-as-a-Service (SaaS) major Zoho witnessed a slowdown in its business in the month of September across countries and across its products on the back of tight macroeconomic pressure wrote Zoho’s co-founder and chief executive officer, Sridhar Vembu on Twitter.

“We saw a fairly pronounced slowdown in growth in September across countries and across products…Caution ahead,” He wrote.

Vembu added that the global economy is taking a turn for the worse.
“Given the geographically and product-wise diversified nature of our revenue streams, I suspect the global economy is taking a turn for the worse,” He wrote.

In FY22, Zoho crossed $1 billion of annual recurring revenue and Zoho’s net profit was up by 43 percent YoY, touching Rs 2,700 crore.

The Russia-Ukraine war and its impact on supply chains, high inflation rates, and the US Federal Reserve’s aggressive interest rate hikes are causing fears of a recession in the US, adding to the sector’s worries.

In fact, large SaaS firms have undertaken layoffs and cut down on their marketing and other spending drastically to brace for the macro pressures.

SaaS major Freshworks undertook at least three rounds of performance-based layoffs, while many other SaaS firms like Zoho have cut down on hirings including placement hirings.

The Indian SaaS industry also saw investments drop nearly 81 percent to $635 million in the first half of 2023 compared with the massive $3,406 million seen during the same period of 2022, as investors turn cautious towards a sector that’s most affected by macroeconomic pressures.

A report by Bessemer also stated that amid a tough funding environment and tight macroeconomic conditions, no SaaS startup joined the League of unicorns so far in 2023 as against around nine of them registered by this time last year.