Billionaire-backed Zoho looks to build data centers in South Africa

Zoho, the Indian software maker co-founded by billionaire Sridhar Vembu, is preparing to pump more money into South Africa as it chases customers who increasingly want their data stored inside the countries where they do business.

Zoho is in talks to expand its own data center footprint in South Africa, alongside new facilities planned for Saudi Arabia and the United Arab Emirates, three markets it describes as among its fastest growing. Hyther Nizam, Zoho’s head of Middle East and Africa, said the company has appointed Equinix to set up facilities in the UAE and has begun discussions aimed at establishing data centers in Saudi Arabia and South Africa. He did not disclose the size of the investment.

The push reflects a broader shift playing out across the region. Governments, banks and regulated industries have been moving more operations into the cloud, but many are also tightening rules around privacy, security and sovereignty. Those demands can make local hosting less of a nice to have and more of a deal breaker, especially for public sector contracts and sensitive corporate workloads.

Zoho’s strategy is to control as much of the stack as possible. Instead of relying entirely on third party cloud infrastructure, the company says it prefers to build and run its own data centers where demand is rising. Nizam said that approach helps Zoho manage costs and offer pricing structures that are more realistic for markets where currency swings can quickly turn subscriptions into a luxury purchase.

Zoho sells cloud based tools that cover everyday business needs such as email, documents, accounting, customer management and hiring. The company positions its suite as a lower cost alternative to dominant platforms, arguing it can offer comparable services at roughly half the price of equivalent packages from the biggest household names in office and productivity software. It also leans heavily on open source building blocks, a model it says keeps costs down and gives it flexibility to adapt products to local requirements.

That combination, cheaper software paired with infrastructure control, is helping drive growth, Nizam said. Zoho’s business across Africa and the Middle East expanded about 50% over the past year, an increase that helps explain why South Africa has moved up its priority list.

South Africa is already crowded with global technology players, but it remains attractive for firms that want a foothold on the continent. It offers a deep base of small and mid sized companies, established financial services institutions and a public sector that has been steadily digitizing. Local data centers can also improve performance by reducing latency, while giving customers comfort that information is not routinely routed to servers on other continents.

Zoho has historically taken a different route from many high growth tech companies. It is privately held and has avoided the venture capital treadmill, funding expansion largely through operating profits. Nizam said Zoho generates much of its revenue from the United States and India and estimated annual revenue at about $1.5 billion. The company says it has more than one million paying customers and operates about 20 data centers globally.

Its physical presence in Africa has been expanding alongside that customer base. Zoho already has offices in South Africa, Kenya, Nigeria and Egypt, and Nizam said the company plans to broaden into more markets including Ghana, Uganda, Tanzania, Zimbabwe and Zambia.

Execution will determine whether the ambition turns into lasting market share. Building data center capacity is expensive, regulatory heavy work, and local customers will judge Zoho less on promises and more on uptime, support and the ability to compete with bigger brands that can outspend almost anyone. The company is betting that control, pricing and patience can still win in a market that is hungry for reliable, affordable software.