The future of enterprise might lie in cloud companies, but Zoho’s founder and chief executive officer (CEO), Sridhar Vembu feels there might be a situation of too much cash in the hands of these entities.

“An excess of capital in the cloud space has led to overcapacity, and many venture capitalists have admitted to this,” said Vembu, speaking exclusively to CNBC-TV18, at the launch of the updated Zoho Office Suite.

“There are nearly 30,000 cloud companies across the world, and India has a few thousand, he said. "There could be a situation like in China where industrial overcapacity the steel sector has impacted the business. Similarly, overcapacity and overfunding in the cloud space could impact this business, if this excess funding goes unchecked.”

The last few months have seen players such as Amazon Web Services make rapid strides in the enterprise software space, sparking speculation that existing players would cut prices, to keep up with the competition. On its part, Zoho Corp also sparked off a price war when it launched Zoho One (a one-stop shop for all of Zoho’s products), in July 2017.

In Vembu’s words, Zoho One has turned into the company’s own version of Amazon Prime. “We managed to start a price war with the launch of Zoho One, since it allowed us greater value proposition for enterprise capabilities,” he said. “So, it’s similar to Amazon Prime in terms of offering those propositions.”

But what Zoho One could also manage to pull off, is catalyse an inevitable price-cut in the enterprise software space. “Enterprise software today is overpriced, and will see price-cuts in the next five or ten years,” said Vembu. “We are already ahead of the curve since Zoho One is aggressively priced. We expect more players to bring greater value to their enterprise offerings.”

At present, Zoho One is the company’s “fastest growing product, ever”, notching up 20,000 customers in just 17 months, with an average customer acquisition rate of 1,000 per month. “We now expect the majority of our revenues to come from Zoho One, in the next couple of years,” said Vembu.

He added that all of Zoho’s customers in India (including names in the finance space) are serviced from data centres in Chennai and Mumbai, as per the provisions of the country’s data localisation proposal.

First Published:Feb 14, 2019 10:19 PM IST