In what appears like a criticism of the recent layoffs at Freshworks, founder Sridhar Vembu has argued that a cash-rich company prioritising shareholder buybacks over employee retention should not expect any loyalty from its employees.
“A company that has $1 billion cash, which is about 1.5 times its annual revenue, and is actually still growing at a decent 20% rate and making a cash profit, laying off 12-13% of its workforce should not expect any loyalty from its employees ever. And to add insult to injury, when it can afford $400 million in a stock buy back,” said Vembu in a post on X.
“I can understand the unfortunate reality of layoffs when a business is struggling or declining and making a loss. This is not that situation, this is naked greed, nothing less,” he added.
Although he did not name the company, Vembu’s comments comes a day after Freshworks slashed around 13% of its global headcount, impacting 660 employees out of its 5,000-strong workforce.
Dennis Woodside, CEO of Freshworks, in an internal memo, said the decision reflects the company’s focus on key growth areas, including AI, employee experience, and customer experience offerings.
Freshworks also announced that its board of directors has approved a stock repurchase programme, authorising the buyback of up to $400 million in outstanding Class A common stock.
In a stock repurchase programme, the company buys back its shares from the open market to increase the value of the remaining shares by reducing the overall supply.
“Here is a critical question to its leadership: don’t you have the vision and imagination to invest $400 million in another line of business where you can deploy those people you hired but you don’t want anymore? Are there no such opportunities in tech? Are you so lacking in curiosity, vision, and imagination? Are you so lacking in empathy?” Vembu said.
He also expressed concern over the increasing trend of US corporations prioritising shareholder value over employee well-being, warning that India is at the risk of adopting the same approach.
“This behavior, sadly, has become all too common in the US corporate world and we are importing it in India. It has only resulted in large scale employee cynicism in the US and we are importing that too. This is why choose to remain private. We put our customers and employees first. Shareholders should come last,” he said.
