Jumping Ship: Why Did Dunzo Shift From Google To Zoho?

Dunzo's financial struggles force a pivotal move, shifting employee accounts from Google to Zoho, cutting costs by a third. Delving into the impact, downsizing, and the broader implications for the troubled quick-commerce startup. Read on.

Swati Dayal
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Struggling to cut costs, Dunzo, a quick-commerce startup, takes a significant step by migrating all employee accounts from Google to Zoho Workplace. This migration is anticipated to reduce costs by a substantial one-third for the embattled company.

Dunzo's Uphill Battle

Since July, Dunzo has faced severe challenges in maintaining financial stability, primarily due to cash flow issues. The struggle has forced the startup to take drastic measures, including delaying salaries, terminating over 500 employees, and relinquishing its Bengaluru office space.

Abrupt Google Workspace Disconnection

The migration was triggered by an abrupt revocation of Dunzo's access to Google Workspace, encompassing Gmail, Meet, Sites, Calendar, AppSheet, and other essential applications. This sudden move resulted from nonpayment to the cloud consultant, leaving employees without access to crucial tools that synchronized schedules and stored vital company information.

Dunzo's Google Workspace access (email, calendars, drive, etc.) was reportedly revoked overnight due to nonpayment to the cloud consultant. People lost their email history – external emails, ongoing conversations with vendors, all of it.

Impact of Google Workspace Disruption

The consequences of the Google Workspace disconnection were severe, with the loss of email history and crucial planning documents stored on Google Drive, including quarterly plans and sprint plans.

Shift to Zoho and Cost Benefits

In response to these challenges, Dunzo has transitioned its operations to Zoho Workplace. Notably, this move has led to a change in the email ID format for all Dunzo employees, shifting from a .in extension to a .com extension.

Apart from addressing immediate operational needs, this migration is also a strategic financial decision. Google Workspace, a suite of offerings, costs at least Rs 1,600 per user per month under the enterprise plan. In contrast, Zoho charges only Rs 489 for a similar arrangement, providing Dunzo with substantial cost savings.

 Downsizing and Financial Strain

The shift to Zoho aligns with Dunzo's broader strategy of downsizing. From a workforce of over 1,300 employees in March, the company aims to reduce its total workforce to not exceed 200 employees.

This downsizing initiative is crucial as Dunzo's net loss surged to Rs 1,802 crore in FY23, marking a staggering 288 percent increase from the previous year. Deloitte, the company's auditor, expressed doubts about Dunzo's ability to continue as a going concern in light of these mounting losses.

Investment Landscape and Stakeholders

Having raised close to $500 million since 2015, Dunzo has prominent investors, including Reliance Retail, Google, Lightrock, Lightbox, and Blume Ventures. Reliance holds the largest stake with 25.8 percent, while Google owns approximately 19 percent of Dunzo, according to Tracxn, a private markets data provider.

Dunzo's Response and Future Outlook

A spokesperson for Dunzo downplayed the significance of the migration, stating, "This migration is just a regular business decision. There were some initial teething issues for the first couple of days, but all of these have been ironed out now."

As Dunzo navigates through financial challenges and operational adjustments, the move to Zoho Workspace signifies a pivotal moment in the company's ongoing efforts to overcome obstacles and establish a sustainable path forward.

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