During a visit to rural Tamil Nadu, Pradhan had visited Zoho’s various centres and been briefed on its work. On the evening of 24 September, he posted about the company’s instant messaging app, Arattai.
The post on Arattai, a Tamil word for chit-chat, quickly went viral and has received over a million views so far. Soon, people across the country started downloading the app. The Zoho team, led by Devegeorge, who was in charge of Arattai, had expected and provisioned for 20-fold growth immediately after the minister’s post. Indeed, Devegeorge had confidently assured Sridhar Vembu, Zoho’s co-founder, erstwhile chief executive officer (CEO) and current chief scientist, that the company had servers and infrastructure in place to handle the expected surge. After all, Zoho was India’s largest enterprise software company, and although consumer tech was different territory, he was sure the company had the chops to handle demand.
But frantic calls from the team revealed that the growth was 100 times more. Concert forgotten, Devegeorge raced to Zoho’s campus, off the Grand Southern Trunk Road, on the outskirts of Tamil Nadu’s capital. He didn’t leave the office for the next four days. Some of his team members stayed on for a few more days even after he finally went home.
“We always knew this was a once-in-a-lifetime product for us (the team). It is not easy from a business point of view and a technology point of view to scale a product to the entire world,” Devegeorge, who joined Zoho in 2006, told Mint. “We are talking about billions of users. I told the team we have to capitalize on this opportunity.”
Devegeorge and his team managed to keep the app up and running and increased capacity. As of 7 October, Arattai, according to the company, reached a combined total of over 10 million downloads on the App Store and Play Store.
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To be sure, that is just a drop in the ocean in comparison with the half a billion plus users that Meta’s messaging app WhatsApp has in India. And it is impossible to predict whether Arattai’s users will stick with the app—while there is no data to that effect, it is highly unlikely that those who have downloaded the app have uninstalled WhatsApp, if they use it.
The Mark Zuckerberg company has weathered such storms in the past, including a brief period in 2021 when people started flirting with rival app Signal amid concerns over WhatsApp sharing user data with its parent.
Admitting that the company faces a daunting challenge, Mani Vembu, CEO of Zoho, told Mint: “Users have already built a strong network in existing messaging applications so it may be difficult to break that initially. We just want users to try Arattai alongside their existing apps.”
Once users see the value Arattai can add, they will begin to use the platform consistently and build their network, he added.
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Regardless of how things play out, it is clear that Arattai has made an indelible mark, especially when seen in the light of the larger geopolitical context. In the new world order, where tech is increasingly being used to shore up and impose economic and political power, “ownership” of technology has become critical.
In fact, a few days before Pradhan’s post, Ashwini Vaishnaw, minister for railways, information and broadcasting, and electronics and information technology, had posted about his intention to shift to the Zoho Office Suite (cloud-based productivity and business applications), and followed this up by using Zoho Show, another tool, to create a presentation for a cabinet briefing.
The supportive posts by the ministers come on the back of the policy and strategic agenda set by Prime Minister Narendra Modi, who spoke about building even social media platforms indigenously during his Independence Day speech.
From B2B to B2C
Zoho has been quietly building consumer tech products for the past four years. There’s Zillum, Zoho’s app suite aimed at families and Ulaa, its web browser. A person with direct knowledge of the development said the company is also working on a microblogging platform, Kural, which translates to voice. The company did not confirm the development.
However, these products haven’t really taken off in a way Arattai has. Ulaa, for instance, has about one million downloads on Play Store. Zillum is even smaller.
A person with direct knowledge of the development said Zoho is also working on a microblogging platform, Kural, which translates to voice. The company did not confirmed the development.
Arattai’s origins can be traced back to 2008, to a tool called Zoho Chat. Like many of the Chennai-headquartered company’s products, Chat evolved from an internal need for colleagues to communicate. Iterations followed, and it eventually became Zoho Cliq, a full-fledged cloud-based business communication platform that has messaging, audio and video calls, and collaboration all built in.
Within Zoho’s active internal forum, employees had suggested building a consumer-facing instant messaging app. Since the frameworks and technology for person-to-person messaging were in place with Zoho Cliq, the team decided in 2021 to try and build a consumer-facing version.
There were initial hiccups while transforming a B2B product into a B2C one. “Every user who signed up was being treated as a business account. We hit a lot of limitations in terms of our architecture, the way we store the data, the way we make the data interoperable with multiple users and things like that,” recalled Devegeorge. “Also, the initial launch was not a launch. Sridhar leaked it on social media (early 2021).”
It was Vembu who chose the name Arattai after a process of shortlisting. For those who know Tamil, Arattai, like many informal Tamil phrases, is deeply evocative. Saying “arattai adikarthu” immediately evokes the image of lazy afternoons spent chit-chatting with friends, ideally on the thinai (verandah) of a village home, sipping good old filter kaapi.
The initial bump in interest, which was limited in comparison to what happened last month, was a validation of the effort, showing there was a real need for such an app. Thereafter, an exclusive team was put together for Arattai.
The team was working on enabling end-to-end encryption and was planning a November launch. But then, the Pradhan post happened, and the rest, as they say, is history.
Cash guzzling business
While the Arattai team is confident of the usefulness of the product they are building, naysayers abound.
“Many have tried and failed. Building a consumer app in India is very tough, and competing with WhatsApp even more so. You need a lot of money to invest, and there’s not much visibility on making money,” said a senior tech expert, who has worked closely with Zoho and Vembu in the past. He spoke on the condition of anonymity.
The struggle is rooted in the dominance of WhatsApp. With three billion active users worldwide and half a billion in India, it is a messaging behemoth. Zuckerberg, in an interview with CNBC, in 2023, had said that WhatsApp-specific click-to-message ads passed a $1.5 billion run rate.
Moreover, while Arattai offers end-to-end encryption (E2EE) for its voice and video calls, it still does not offer the same level of encryption for text messages, the bread and butter of any messaging app. That is to say, messages are not scrambled when sent and unscrambled when they reach the recipient and are therefore vulnerable to unauthorized access either internally or to hackers. And that could prove to be a dealbreaker in a world where data privacy is sacrosanct. Indeed, in the event of a major breach, users are just as likely to quit the platform as quickly as they downloaded it.
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The past shows the difficulties that challengers face. Hike Messenger, India’s best-known messaging app, had 100 million users at its peak but shut down in 2021.
Given the massive investment in servers, data centres, and network bandwidth, sustaining an instant messaging platform with a large user base is not for the faint-hearted.
Zoho’s edge
So how will Arattai sustain itself, especially given that Zoho says it has no intention of monetizing user data?
Zoho is an interesting outlier in India’s tech and startup ecosystem. A bootstrapped company, its founders have repeatedly reiterated their intention to never go public. According to company filings, the company has a small pool of shareholders. As of March 2024, Sridhar’s sister Radha Vembu owned about 47.8%; brother Sekar Vembu, one of the co-founders, owned about 35.2%; another co-founder, Tony Thomas, owned about 8%, while Sridhar Vembu himself owned just 5%.
The company’s two key product suites—IT management product ManageEngine and the eponymous business tools product Zoho—bring in about $1 billion in revenue annually, say sources in the know. Overall, according to statements by the software maker, it earned $1.5 billion in revenue in 2024. The company is profitable and not short on cash.
ManageEngine has over 60 enterprise tools and around an equal number of free tools. The Zoho suite of business tools has around 55 products. Vembu recently posted on X that his is the only company that can compete almost tool-to-tool with global giant Microsoft.
Zoho’s product suite is certainly vast and it has built a strong technology infrastructure to manage it. For instance, the company has its own data centres worldwide, including in India, and does not use third-party providers like AWS. Similarly, its messaging/AV framework was already built for other tools, such as Zoho Meeting. Arattai uses this infrastructure that the money-making tools already use.
Nevertheless, if all goes well for Arattai, and users balloon to the hundreds of millions or even billions, then costs such as those associated with data centres will shoot up. And that’s where Zoho’s closely held nature comes into play. The co-founders or management, primarily the Vembu siblings, are, in effect, answerable only to themselves as shareholders. Zoho can use profits from one product to drive development of experimental products, without worrying about shareholder questions.
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That said, the Arattai team is exploring multiple features that could potentially bring in money in the future.
“We are looking at UPI integration in Arattai so that payments can happen. We are also thinking of bringing commerce into it with the ONDC network. And, we are also working on a business account in Arattai. Small businesses can showcase their catalogues and users can interact with the business right within the app,” said Devegeorge.
All of this will hinge not just on how quickly Arattai scales, but also on whether it can demonstrate user stickiness at scale.
The Swadeshi gambit
Despite Vembu’s elite education—a BTech from IIT Madras and an MS and PhD from Princeton University—he has assiduously cultivated a son-of-the-soil image. Typically clad in a veshti (dhoti), he spends a chunk of his time in rural Tamil Nadu. His posts of riding a bicycle along village lanes, reviving traditional water tanks, or supporting local schools, along with his often controversial positions on business, politics and global affairs have earned him a large following on social media.
As early as 2004, the company had set up Zoho Schools to offer software education and training to rural students as an alternative to college education. Many of Zoho’s employees have entered the company through this route. It followed this up by setting up an office in Tenkasi, 625 km south of Chennai.
“Zoho and Sridhar have always pushed the ‘Made in India, Made for the World’ philosophy. In fact, we used to say this even before the Indian government launched the Make in India program,” said the Zoho insider cited earlier, who had worked closely with the senior management at the company for over a decade. “Sridhar has been talking about building social media and other consumer apps in India, for India, for a long time.”
Around the time of the pandemic, Vembu openly started leaning towards the ruling government at the centre, though he has reiterated that the company has no affiliation with any political party. Looking to increase business from within India, Zoho also started aiming for government and public sector contracts. The first big-ticket one was implementing its CRM Edge platform for the Union Bank of India (UBI), work for which began in 2021.
The game-changer was winning a contract with the National Informatics Centre (NIC) to provide email and productivity suites to government employees, in late 2023. This meant other government departments and public sector undertakings could use any Zoho product that was approved by NIC.
This brought policymaker-level and ministerial-level attention to Zoho. The fact that Zoho Mail has been running at multiple government departments for a couple of years now has also given policymakers confidence.
Avoiding digital colonisation
Why should an instant messaging app built in India matter? And, will Arattai stick? Sharad Sharma, co-founder of tech think tank iSPIRT, said the world has changed and the days of the open internet are in the past. AI, the latest technology advancement, is being used by countries such as the US and China to bolster and advance their economic and political interests.
With India Stack’s UPI, India has a strong advantage in digital payments. But, that advantage does not extend to other areas such as AI, messaging, mobile app stores and the soon-to-arrive AI Agent store. Not just that, the digital ad ecosystem, web search, and social media also need attention.
“These are the immediate areas we need to redirect our focus towards if we want to avoid digital colonisation,” said Sharma. iSPIRT was instrumental in the creation of the country’s digital public infrastructure under India Stack.
But, it is one thing to build a product and another to get users to adopt it. Here Sharma points out that people have adopted UPI en masse because it is better than the alternative.
This is a market reality that the Zoho and Arattai team are aware of. Praval Singh, vice president of marketing and customer experience at Zoho, admits that an app like this needs to become a daily habit for customers to stick with it. “Which is where we are going to build on in terms of features, integrations, marketplace, and more,” he added. “For example, UPI is something that we are working on.”
Zoho, nonetheless, has its task cut out. As Sharma put it, “To pull share from powerful players who have network effects won’t be easy. But, this needs to be done. It needs to be tried. There is no other choice.”
