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One thing Zoho does very differently is "outsourcing." I put that word in quotes because Zoho is partly based in Chennai, India, where I believe the CEO Sridhar

One thing Zoho does very differently is "outsourcing." I put that word in quotes because Zoho is partly based in Chennai, India, where I believe the CEO Sridhar is from. In fact the majority of the employees are based there, which keeps cost way down. Now, they don't treat their Chennai office as a second-rate sweatshop to whom you parcel off grunt work and forget about it. That is a recipe for disaster. At the same time, they are very open about the fact that CS education/programming skills in India aren't nearly as good as in the U.S. So what do they do? They train their Indian programmers in house for 9 months. You can definitely take smart people without a great educational background and bring them up to speed if you're prepared to do that. Sridhar is http://news.ycombinator.com/user?id=sridharvembu http://news.ycombinator.com/user?id=sridharvembu, hopefully he can give us more details and correct me if I've gotten anything wrong.

zhyder 17y ago
A better term for what Zoho does is "offshoring". Outsourcing and offshoring are orthogonal. It's only when the two go together that you get sweatshops.
- sharpn 17y ago
  Good point. I like the term 'smart-sourcing' - having a presence 'on-shore' & 'off-shore' & having the customer-relationship stuff done near the customer (on-shore) & the non-relationship stuff wherever's best (sometimes, but not always 'off-shore).
- sridharvembu 17y ago
  An even better term for us is "and Indian company with an American HQ" - in early days due to foreign exchange restrictions in India, it was painful to have the HQ in India. Increasingly that has faded as India has liberalized. We just imported a ton of Macs for our development team in Chennai; 10 years ago that would have sucked, now it is easy.
  - eru 17y ago
    So with enough liberalizing (and perhaps more Indian customers) the American HQ might move to India?
netsp 17y ago
That makes sense. But I still don't see how it adds up to a bootstrapped product company. Especially not one like Zoho (wide product range, products directly competing with major players, products in long established categories and classes). India is one hell of a resource. It's kind of raw at the moment. IE, you can't easily just buy services there and expect good quality. Being able to make it work well could be one hell of an advantage. As you say, you can't just take elance rates and calculate what you save by producing in India. You would probably end up paying many times more to attract, train & keep the best. Could still be cheaper the California, but probably within range. Basically what I am saying is this: You can probably save a lot and still get quality by being exceptionally good at producing in India. Sounds like Zoho is. But that still doesn't bring your costs down by enough to give a competitive edge to a product company. If you are a service business, cutting production costs (without harming quality) to 60% is a massive edge. If you are a product company, does that still apply? Side note: It sounds like Zoho's important "technology" is knowing how to produce great quality products in India. I wonder if that is technology another company would pay to acquire. How much would it be valued at? - update: - I have just read some of the other comments and found a link that sheds some light on my questions, I think. The product company / service company split is far to simplistic. Zoho sees itself as a business software company. An area where (apart form MSFT's monopoly), margins do count and success is not binary. Getting employment costs down and productivity up, even marginally, can make a difference here. I recommend reading the blog post. http://blogs.zoho.com/uncategorized/why-we-compete-with-google http://blogs.zoho.com/uncategorized/why-we-compete-with-goog...

zhyder 17y ago

A better term for what Zoho does is "offshoring". Outsourcing and offshoring are orthogonal. It's only when the two go together that you get sweatshops.

sharpn 17y ago
Good point. I like the term 'smart-sourcing' - having a presence 'on-shore' & 'off-shore' & having the customer-relationship stuff done near the customer (on-shore) & the non-relationship stuff wherever's best (sometimes, but not always 'off-shore).
sridharvembu 17y ago
An even better term for us is "and Indian company with an American HQ" - in early days due to foreign exchange restrictions in India, it was painful to have the HQ in India. Increasingly that has faded as India has liberalized. We just imported a ton of Macs for our development team in Chennai; 10 years ago that would have sucked, now it is easy.
- eru 17y ago
  So with enough liberalizing (and perhaps more Indian customers) the American HQ might move to India?

netsp 17y ago

That makes sense. But I still don't see how it adds up to a bootstrapped product company. Especially not one like Zoho (wide product range, products directly competing with major players, products in long established categories and classes). India is one hell of a resource. It's kind of raw at the moment. IE, you can't easily just buy services there and expect good quality. Being able to make it work well could be one hell of an advantage. As you say, you can't just take elance rates and calculate what you save by producing in India. You would probably end up paying many times more to attract, train & keep the best. Could still be cheaper the California, but probably within range. Basically what I am saying is this: You can probably save a lot and still get quality by being exceptionally good at producing in India. Sounds like Zoho is. But that still doesn't bring your costs down by enough to give a competitive edge to a product company. If you are a service business, cutting production costs (without harming quality) to 60% is a massive edge. If you are a product company, does that still apply? Side note: It sounds like Zoho's important "technology" is knowing how to produce great quality products in India. I wonder if that is technology another company would pay to acquire. How much would it be valued at? - update: - I have just read some of the other comments and found a link that sheds some light on my questions, I think. The product company / service company split is far to simplistic. Zoho sees itself as a business software company. An area where (apart form MSFT's monopoly), margins do count and success is not binary. Getting employment costs down and productivity up, even marginally, can make a difference here. I recommend reading the blog post. http://blogs.zoho.com/uncategorized/why-we-compete-with-google http://blogs.zoho.com/uncategorized/why-we-compete-with-goog...