Compiled from the speech delivered by Sridhar Vembu, CEO, ZoHo Corporation at an event organized by MMA Namakkal Chapter.
A student should not take pride merely in obtaining degrees or certificates. Bill Gates, Michael Dell, Mark Zuckerberg, and Steve Jobs did not complete their college education; they are all college dropouts. We run a school in Govindaperi village in Tenkasi, named as ‘Kalaivani Kalvi Maiyam’ under the open schooling program, which is equivalent to CBSE. The school primarily serves the children of migrant workers and poor people. Even if students drop out due to family obligations or other pressures, they can return and re-enroll in the same school. The curriculum is flexible and tailored to meet the needs of village students. Currently, there are 220 students, with more expected to join.
Three Qualities for Success
Before delving into digital transformation, I would like to emphasise that alongside academic education, a student’s mental attitude is crucial for their growth. Although I don’t know much about semiconductors, I can always learn about them. Our school aims to instill self-confidence, self-motivation, and self-discipline in students. These three qualities, I believe, form the foundation for any successful person. Knowledge must be built on top of these traits. Often, we tend to waste time, money, or both, due to a lack of self-discipline.
Every industry is undergoing significant changes due to digital transformation and AI. To embrace this transformation, we need both knowledge and technology. My ancestors were from Nagapattinam. Today, that area faces severe poverty, and we are doing some work there now. Interestingly, if you travel west towards Tanjore side, there is still poverty, but it is not as extreme as in Nagapattinam. Places like Kongu districts including Namakkal have managed to overcome poverty and grow.
Poverty Triggers Competition
In areas of deep poverty, wages are extremely low, and workers are often exploited with long working hours. If I were to set up an office in Nagapattinam, a salary of ₹15,000 per month would be considered substantial. In this way, impoverished areas will compete with more developed regions like Kongu districts. As a nation, how should we capitalise on this? We should aim to compete with countries like Thailand, Switzerland, and South Korea, as we are not as economically comfortable as they are.
Namakkal has an industrial base, but the challenge is to elevate it to the next level. Digital transformation is one aspect of this evolution. In simple terms, productivity for a software company can be measured by revenue per employee per year. For instance, this is $50,000 for TCS and $1 million for Microsoft. For other industries, this metric could be adjusted to ‘value added per employee per year.’ The software industry pays higher salaries because productivity is higher. The value addition of an entire country is reflected in its GDP. A region with higher value addition is, therefore, economically more developed.
Improving Productivity
The reason a worker earns ₹4,000 in a place like Kadayam or ₹6,000 in Nagapattinam is due to lower value addition in those regions. It’s not the result of any conspiracy, but because businesses there lack the funds to pay more. Technology providers on the other hand, add high value. Typically, an employee earns about one-third of the value they add. At Zoho, we teach this concept of productivity from the outset and motivate employees to be more productive.
How can we increase productivity? Should employees work more than 12 or 20 hours a day? That’s not feasible. This is where technology plays a crucial role. Namakkal is part of a mid-level economy, while India as a whole is in a lower economic tier. India has 832 districts, and Tamil Nadu has 39. Of these, at least 630 districts in India are in poverty. Namakkal may be in the top 5%, and districts in the Kongu region might be in the top 1-2%. This presents both an opportunity and a threat, as underdeveloped districts compete with more developed ones. Labour costs are higher in economically developed regions, which is why transformation is necessary to stay competitive.
Zoho doesn’t compete with TCS but with companies like Microsoft, Google, Salesforce, and SAP. Developing software like Microsoft’s is highly challenging and requires significant knowledge and skills. OpenAI is now everywhere, and most software integrate AI. Zoho’s software also uses AI, both OpenAI models and our own internally developed models. My prediction is that in 5 to 10 years, 10 software engineers will be able to do the work currently done by 100 engineers. This will dramatically increase productivity. However, there’s both good and bad news in this—there’s no guarantee that everyone will retain their jobs.
The Weavers of Code
A software engineer weaves code just like a traditional weaver weaves cloth. When power looms and air-jet looms were introduced, manual weavers lost their jobs—over 90% of them. The same will happen to software engineers with AI. Today, AI-generated code might not be great, but in five years, it will be much better. We need to become the “air-jet weavers” of the software industry. Success isn’t guaranteed. When TikTok emerged, it significantly affected Facebook. Similarly, in the next 10 to 15 years, there’s no guarantee that everyone will still be using iPhones. It’s always wise to create the technology that could replace us.
We are already implementing these tools at Zoho, and while the full results of our efforts in transformation will only be seen in five years, I can already observe a marked improvement in productivity. I spend 70% of my time focussing on such technological advancements. We are going to see these improvements across industries.
Make Disrupting Products
Xiaomi in China is now manufacturing electric cars, and their factory is fully automated. China is producing robots in large numbers. Until recently, Japan and Germany were leaders in robot manufacturing, and India has been buying robots from these countries. In Indian factories, 80% of advanced machinery is imported, and 90% of advanced hospital equipment comes from abroad. My father recently passed away after being in the ICU, and during my visits to the hospital to see him, I would critically examine the equipment, the technology used, and the country of origin. This would spark my curiosity about the value addition they offer.
We’ve recently started a small venture to produce basic medical equipment with 60 engineers working on it. Over the next 5 to 10 years, we plan to scale up with many new products. We’ve also established R&D centres and started a unit for making motor winding machines, located close to my home in my native village. We have five engineers working there, and they recently gave me a successful demo of the product. This machine will cost 50% less than an imported one. These are examples of taking a proactive role in the transformation journey. Instead of blaming the transformation, it’s better to be a part of it and become enablers of change.
To achieve this, we must be self-motivated and self-driven. Yesterday, I spent six hours studying the Next.js framework, which is used to develop the latest kinds of web applications. I learn these tools to see if we can develop something better. I encourage students to use their spare time to learn new frameworks like Next.js. Try to develop code. The internet offers the advantage of letting you learn about any product or machinery from anywhere. I watch such videos, and if they are in a foreign language, I use Google Translate. That’s how I learn.
Develop Curiosity
Whenever we buy a product, we should be curious to know where it’s made and what technology is used. Within a day, you can search Wikipedia, watch videos, and learn at least the basics. Self-motivation is key to this kind of learning. Often, our self-discipline is diluted by our friends, and conversely, we sometimes lead our friends astray. My advice to young people is to avoid friends who derail you and seek the company of self-driven people. If you’re the one negatively influencing your friends, change yourself first. That’s how personal growth happens.
People often say I lead a simple life. When you want to achieve great things, simplicity and focus are essential. Swami Vivekananda said that meditation isn’t just about closing your eyes and forgetting about the world. For a sportsperson, meditation can be playing a sport; for Ramanujan, it was immersing himself in mathematics; for me, it’s getting lost in doing my work or learning new things like Next.js. Meditation is when you lose track of time doing something meaningful.
The opposite of meditation is boredom. When you don’t know how to spend your time, it means you’re lacking interest. Personal transformation must precede digital transformation. Our thoughts lead to actions. I also have a word of advice for young people regarding health. Hunger is still a problem in some rural areas, but in many regions, the issue is overeating and binge eating. Please be mindful of your diet. At Zoho, we provide food for employees, and many gain at least five kilograms after joining. I advise my employees to be careful with their food intake.
Software can be Changed
I recently saw a video on X (formerly Twitter) that said our brain has an operating system that determines who we want to become. While we can’t change the brain (the hardware), we can change the software—our thoughts. Buddha was the first to discover this. He taught that we can change our thoughts. To me, Buddha is the first software engineer in the world. By monitoring our thoughts and developing self-awareness, we can alter our mental state. Though it’s difficult at first, it becomes easier over time. Being angry without awareness is harmful. But if you’re aware of your anger, you can manage and reduce it. When you’re angry, think about updating your own software to reduce your anger, just as you would update a software to correct the bugs.
No matter how much you grow in life, never lose sight of righteousness or dharma. Do not cut trees, do not steal, do not pollute the soil, and do not adulterate—these are examples of righteousness. Talent does not guarantee righteousness. We’ve seen highly talented people commit massive frauds. Only with a foundation of morality can your knowledge, skills, and talents be channelled positively.
Lead a Sustainable Life
The world today needs more of righteousness. Global warming, for example, can be addressed if we follow righteousness. Simplicity is also a part of it. The earth is pure, and we should not harm it by being wasteful or extravagant. For instance, if I burn 500 litres of diesel today just because I can afford to, I am not following dharma. Practice simplicity as much as possible and live sustainably. If we don’t embrace this mindset now, we won’t be able to save the planet. Change must come from within, starting with our thoughts. We must avoid polluting water bodies and harming the environment.
The reason why Lord Ganesha’s statue is often placed by a banyan tree or near a lake bund is to convey the message that these natural elements are precious and must be safeguarded. Similarly, the reason temples of Lord Muruga are built atop hills is to emphasise that the hills are sacred and should be protected. If we keep the statue of Ganesha but cut down the banyan tree, we are disrespecting the very essence of what the deity represents. Even with advancements in technology and digital transformation, if our actions lack morality, the world will face a rapid decline. To protect ourselves from the effects of climate change, we must practice righteousness in all our deeds.
Q&A
Why does Zoho focus on setting up offices in villages?
First, for righteousness to thrive, economic prosperity is essential. Since villages are often economically disadvantaged, setting up offices and factories there helps improve their local economy.
Second, Tamil Nadu’s population density is 550 people per square kilometre, compared to India’s average of 350 per square kilometre. The population density in the U.S. is around 30 and in Canada, it’s only 3 to 4. Though China is larger than India, its population density is just 150. To avoid overcrowding in cities, we need to shift focus to developing our villages. Otherwise, life in cities will become unbearable. To provide a high quality of life to our citizens, we must develop our rural areas. I believe in Dr Abdul Kalam’s vision and follow the concept of one of his pet projects called PURA (Provision of Urban Facilities in Rural Areas). We have so far developed about 15 villages. My goal is to develop at least 100 villages.
Q: I feel that the people of Namakkal are not thinking beyond the transport and logistics sector. What should we do to change this mindset?
A: I believe every job is sacred. If Namakkal excels in transport, the next step is to think bigger and explore if you can manufacture engines for those transport vehicles. I have observed that the diesel engines used in ships are mostly German-made. Why not consider setting up a factory to manufacture these engines here? The bright children of Namakkal should be ready to take on these types of businesses, as they grow up.
However, many prefer to go to prestigious institutions like the Harvard Business School or London School of Economics. The truth is, these institutions don’t have the answers to the problems that are unique to India. We often send our children to prestigious schools, but prestige can be the enemy of progress. The answers to our challenges lie within us. The future growth of Namakkal depends on its own people.
Q: What is your goal in promoting digital transformation?
A: My main objective is to create employment opportunities for our youth. Since childhood, I’ve wondered why India remains a poor country. Jobs are the key to changing people’s lives. Namakkal has transformed because of the hard work of its people and the industries that have developed here. If India is to advance to the next level, we need digital transformation.
Q: What makes you happy as the CEO of Zoho?
A: I’m happy when our products are good. I am happy if both our customers and employees are satisfied.
Q: What is the most challenging part of digital transformation?
A: One of the biggest challenges in the coming five years is how to manage employees if the employment rate drops due to AI. This is a major concern.
Q: What should I do to join Zoho?
A: More than specific skills, you need curiosity. You must show that you have the ability and willingness to learn. This attitude towards learning is very important to us.
Q: Namakkal produces a lion’s share of the LPG tankers made in India. With pipelines being promoted to replace LPG cylinders, this business is under threat and many employees will lose their jobs. Do you have any suggestions on how we can overcome this crisis?
A: This situation is very similar to the challenge AI poses to the software industry. You might consider rebranding your business from LPG transportation to the transport of hazardous chemicals. Ask yourself: Can we repurpose these tankers? Can we innovate the way we handle these goods? Finding new uses for your existing infrastructure is key to overcoming this challenge.
Q: Corruption often hampers young people from starting small enterprises in villages. How can we overcome this issue?
A: Corruption is a persistent issue in India. It tends to decrease as economic growth increases, but at the same time, it stifles that very growth. This creates a paradox. The key is to drive economic growth despite corruption. The Kongu region, for example, has managed to achieve economic success in such a scenario. We need to foster an environment where taking bribes becomes socially unacceptable, and those who engage in corruption feel ashamed of it.
