Zoho has been building software for Indian businesses for nearly three decades. But 2026 feels different. Sridhar Vembu, the company's founder and CEO, has been unusually vocal this year about where Zoho is headed, and if you run a small or medium business using Zoho CRM, Zoho Books, or any of their 55+ apps, you should probably pay attention. The Zoho AI-first overhaul is more than a product update. It's a strategic repositioning that could reshape how Indian SMBs think about software altogether.
Here's the short version. Zoho is rolling out agentic AI features across its enterprise suite, launching a made-in-India ERP platform, and expanding its rural workforce in Kumbakonam and Uttar Pradesh. And Vembu is making a bet that India has to build its own AI infrastructure or risk getting hit by import costs the way oil once burned our foreign exchange reserves. That last point is more interesting than it sounds.
What Zoho actually announced for Indian enterprises
The Indian Express reported that Zoho has rolled out new agentic AI features across its enterprise apps as part of what it's calling a Swadeshi push. The word matters. Zoho isn't just adding AI features. They're framing this as a deliberate counter to the Silicon Valley AI stack that most Indian companies are currently dependent on.
Zoho CRM and Zoho Books are both getting AI upgrades, and so is the company's ERP platform, which Zoho officially launched this year targeting Indian enterprises. ERP Today covered this launch and noted the platform is aimed specifically at the Indian market first, with global rollout planned later. That's a reversal of how most enterprise software works. Usually it's built for the US or EU and then localised for India, badly, at a discount.
Zoho also confirmed that its Bigin product, the CRM designed for very small businesses starting at around Rs 549 per user per month, is getting AI agents that can handle things like follow-up scheduling and lead qualification, updating the pipeline without a human doing each step manually. For a kirana owner or a small trading firm in Surat, that's actually meaningful. You don't need a dedicated sales ops person anymore. The agent does the boring parts.
Vembu told Moneycontrol that AI inference costs could "hit India like oil imports" — meaning if India depends entirely on foreign AI infrastructure to power its software, those costs will keep flowing out of the country with no local alternative to fall back on.
Separately, Vembu confirmed that Arattai, Zoho's team communication platform, is getting a significant security upgrade involving improved encryption. Mint reported on this, though full technical details weren't publicly disclosed. In my experience, security upgrades to internal communication tools rarely get the attention they deserve until something actually goes wrong. If your business uses Arattai for anything commercially sensitive, that update is worth watching.
Why Vembu is worried about AI inference costs for India
This is the part most coverage is skipping over. And it's genuinely important. I'm not entirely sure why it keeps getting buried, but here it is.
When you use an AI feature in any app, there's a real cost behind it. That call usually goes to OpenAI or Anthropic, billed per token. Both are US-based companies. The money flows out of India. Multiply that across thousands of Indian software companies all running AI features on foreign infrastructure, and you've got a structural foreign exchange problem that looks a lot like oil dependency (which, if you remember the 1990s current account mess, isn't a comparison to dismiss).
Vembu's argument is that India needs to build domestic AI inference capacity, meaning local models and local data centres. He praised Sarvam AI's recent Sarvam 30B release and said India should "build the foundation first." That's a reasonable position. He's not claiming Indian AI will beat OpenAI next year. He's saying India needs the foundation in place so it has options when costs climb. And if you ask me, that's the right read.
He's also been blunt about the bubble itself. Vembu publicly called the current AI investment environment "insane and bigger than 1999" in comments covered by the Economic Times. That's a company founder simultaneously building AI into every product he ships while warning that the broader market is overheated. Complicated? Yes. But also more honest than the standard corporate AI boosterism you hear everywhere else right now.
For Indian SMBs deciding which software to use, this has a practical implication. If the AI features in your accounting software are powered by API calls to a foreign LLM and those costs go up, your subscription price goes up too. A domestically-built AI stack could insulate Indian software companies from that pressure. So that's Zoho's long game.
What actually changes for Indian SMBs using Zoho products
If you're already on Zoho One or one of their standalone products, here's what the AI push means in practice.
Zoho CRM and Bigin AI agents
The new AI agents in Zoho CRM handle routine tasks on their own, like sending follow-up emails and updating deal stages based on activity. Bigin, priced for businesses with small sales teams, is getting similar features. Honestly, for a small business owner who's currently doing all this manually or ignoring their CRM entirely because it's too much effort (annoying, I know), this is probably the most immediately useful thing Zoho has shipped in some time.
The Futurum Group specifically looked at whether Bigin's AI agents could redefine CRM automation for small businesses. Their assessment: the potential is real, but it depends heavily on how well the agents handle Indian-language inputs and local business workflows. The numbers on Indian-language NLP quality are honestly a bit fuzzy across the whole industry right now. An AI agent that only works cleanly in English is less useful for a business in Rajkot or Ludhiana.
The made-in-India ERP platform
The bigger, slower-burn story is the ERP launch. Enterprise Resource Planning software has historically been a mess for Indian SMBs. SAP is too expensive. Older ERPs are badly localised. Most cloud options don't handle Indian GST and compliance well out of the box, which means you end up needing a local CA and an IT consultant on top of the foreign product, just to make it work legally in India.
Thing is, Zoho's platform is built with Indian tax structures in mind from the start. GST filing, e-invoicing under the government's e-invoice mandate, TDS calculations, Indian payroll, these aren't afterthoughts bolted on later. That alone puts it ahead of most international competitors for an Indian business context.
Enterprise Times noted the platform is currently India-focused with global rollout planned, which suggests Zoho is treating India as the test market for an eventually larger product. That's actually a good sign for quality, in my view. They'll work out the real-world kinks here before scaling internationally, which means Indian users get a more battle-tested product than they usually do from global vendors.
The hub-and-spoke expansion into small-town India
Zoho is also making a move most tech companies actively avoid: going into India's smaller cities and towns for hiring and operations.
Moneycontrol reported that Vembu is taking Zoho's hub-and-spoke model to small towns in Uttar Pradesh in 2026. Combined with the Kumbakonam expansion, where Zoho is growing its local team to 2,000 people, this is a deliberate strategy of hiring outside the Bengaluru-Hyderabad-Pune tech corridor. Vembu has long argued that Indian tech companies are making a mistake by clustering all their talent in expensive metros. I think he's right about this, for what it's worth.
Why should you care as a Zoho customer?
- Support and localisation teams based in smaller Indian cities are closer to the kinds of businesses they're actually serving, not insulated inside a Bengaluru tech park.
- Lower operating costs for Zoho can translate into more competitive pricing compared to rivals running entirely out of expensive metro offices.
- It's a real test of whether Indian tech companies can build product and support capabilities outside the usual talent clusters, which matters for the sector's long-term health.
Whether this translates into meaningfully better software for a textile exporter in Kanpur or a pharma distributor in Lucknow remains to be seen. But the direction is right.
Zoho vs the AI giants: the competitive picture in 2026
There's a competitive pressure worth naming directly. Salesforce and Microsoft are competing aggressively for the Indian enterprise software market, and now Anthropic has joined in. Anthropic's Claude Cowork product specifically hit stocks of Indian IT and SaaS companies recently, per India Today. The market got nervous that an AI-native alternative to traditional software was arriving and that Indian IT companies would lose the implementation work that currently generates a lot of their revenue.
Zoho's answer to this is not to pretend AI isn't changing things. Vembu has been direct: he thinks the bubble is dangerous, and he's also building AI features into every product Zoho ships. Honestly, that's the only rational position available. You can think a bubble is dangerous and still need to compete in the market it's created. That's not hypocrisy. It's the actual business situation every company in this space faces right now.
For understanding how India's AI and software regulations are shaping this space, the DPDP Act is worth keeping an eye on. Zoho's data localisation decisions, particularly keeping Indian customer data on Indian infrastructure, will matter a lot as enforcement ramps up. That's another area where Zoho's India-first approach is a structural advantage over foreign competitors who are still figuring out what the law requires.
And if you want to compare Zoho against other Indian-friendly SMB software options, the honest answer is that Zoho One at roughly Rs 1,199 per user per month gives you more integrated apps than almost any comparable bundle in the Indian market. The AI additions make that calculus more interesting, not less.
What to watch in the second half of 2026
A few things worth tracking as Zoho's announcements turn into shipped products.
- How AI features get priced for existing subscribers. Will agentic AI be bundled in Zoho One, or will there be a separate AI tier that pushes monthly costs higher?
- Whether the made-in-India ERP gains traction against Tally, which still holds enormous market share among smaller Indian businesses because of its GST plugin ecosystem and accountant familiarity.
- Whether the hub-and-spoke UP expansion produces the localised support improvements Vembu is promising, or whether it turns out to be primarily a cost-reduction move.
- How the Arattai security upgrade lands for businesses currently using it for sensitive communication.
Zoho has been around long enough to have earned some benefit of the doubt, if you ask me. They've shipped real products and kept prices reasonable in India. They also haven't taken the kind of foreign VC money that tends to change a company's priorities (and it does change priorities, every time). Vembu's AI caution is probably correct in the medium term, even if it sounds contrarian while everyone else is in full hype mode.
But announcements are easy. Shipping AI features that actually work for a business owner in Coimbatore who has never opened a CRM before, that's the hard part. Check back by December and we'll have a clearer picture of whether the overhaul delivered what it promised.
For more on Indian tech company strategies and policy updates in 2026, we cover this space regularly.
