Zoho sees India as fastest-growing market as enterprise deals accelerate

India’s largest privately held tech services firm, Zoho Corp., expects India’s small businesses and enterprises to generate more than $1 billion in revenue within the next five fiscal years, its new chief executive, Mani Vembu, told Mint on Thursday.

Speaking with Mint, Mani Vembu, who took over after his elder brother Sreedhar stepped down to become “chief scientist” of the Zoho group in January this year, projected that demand for digital services from 63 million-plus homegrown small and medium businesses (SMBs) can make India alone generate more than $1 billion within the next five fiscals.

“With how the India story is now evolving, we expect business in this geography to grow more than 30% year-on-year for five straight fiscals. For the past 10 fiscals, revenue from India has grown at a compounded rate of 51% annually—today, it contributes 15% of our overall revenue,” Vembu told Mint.

Zoho is India’s biggest privately held tech services provider. It competes for revenue with peers LTIMindtree, Mphasis, Coforge, Persistent Services and others. In FY23, the company reported that its group revenue crossed $1 billion. At the time of going to press, Zoho had yet to file its FY24 and FY25 financials.

Vembu said that as of FY25, India generated 15% of the company’s revenue. North America still accounts for nearly half of Zoho Corp’s revenue, but is a slowing geography due to inflation concerns and macroeconomic uncertainties—as well as a transition phase in technology due to enterprises being disrupted by artificial intelligence.

Slowing earnings

Over the past week, four of India’s top five IT services firms reported quarterly revenue declines—driven by weakness in North America. India, on this note, has already proven to be a ground that can offer large deals—as seen in Tata Consultancy Services’ (TCS) $1.83-billion deal with state-run telecom operator Bharat Sanchar Nigam Ltd in May 2023. This quarter, the completion of the BSNL deal, coupled with a slowdown in North America, clearly hurt TCS—India’s largest tech services outsourcing firm.

Industry analysts added that efforts to amplify revenue from India—typically a muted market for IT services firms—is a rising industry trend. Akshay Khanna, managing partner at tech consulting firm Avasant, said that while“India has not contributed significantly so far, lately there has been a shift, even though India accounts for less than 10% of the industry’s net revenue.”

“Generating broad-based revenue from India is all about catching enterprises at the right time. The same goes for small and medium businesses, who could potentially grow to be larger companies in due time,” Khanna added.

Vembu also claimed that, driven by Sreedhar, the company spends “up to 35% of its revenue” on research and development initiatives. On Thursday, the company unveiled its own, 7 billion-parameter large language model, which it is implementing across its own software offerings—and replacing third-party models such as OpenAI’s GPT and Google’s Gemini.

A senior equity analyst at a Mumbai-based brokerage, requesting anonymity, said that such moves are “largely to attempt cost arbitrage in tech services firms, where leveraging margin expansion is perhaps the biggest factor to ensure that an operation remains profitable”.

“Zoho had otherwise seen a steady phase of growth until FY23, but over the past years, has switched to an India-focused growth strategy—a factor that might just help it jump ahead of some of its peers in grabbing an early share of small businesses undertaking digital transformation,” the analyst added.

However, Mint could not independently ascertain Vembu’s R&D spending claim. So far, the company acquired Asimov Robotics earlier this year but has put its battery manufacturing and semiconductor industry plans on the back burner after neither materialised in terms of technical know-how or product-market fit.