Welcome to Business Today. I am Sidharth Zarabi and with me now Jay Chaudhry, the CEO of Zscaler, a company that many people in the IT space know very well, a $30 billion market cap. Mr. Chaudhry, welcome to Business Today. You've been talking to us almost every year for the past two, three years and we've dissected and understood various technology trends that have happened. As we begin this conversation, I just want to begin by a larger macro question which is to do with the technology sector and what is likely to happen in 2025. There have been significant political changes in the United States and a different sort of approach towards trade is now rolling out. How's the outlook for 2025?
Overall, US is very bullish. The forecast and overall economy is good. Technology is powering every business these days, whether it's AI, ML, it's Cloud, it's Mobility, it's the most important area. So outlook for technology companies is very good. Business growth in the US is quite good and growth prospects in India are pretty good too. Some other parts of the world are lukewarm.
Okay, since you spoke about US growth, one's been noticing renewed sense of optimism, particularly after the 20th of January in US CEOs that there will be growth. The Trump macroeconomic policy framework is going to be positive for US growth. Is that an assessment that you share? The large businesses are bullish because they feel that the regulatory burden will be removed and overall this Trump presidency is good for businesses.
Overall good for businesses, absolutely. The Republican approach towards taxes, lesser or lower spending in government, and climate, all of those are pretty well known.
Let me ask you to speak about technology trends and also from a perspective of what's happening in India over the recent year. As greater and faster digital adoption becomes the norm, as more and more people come onto various digital interfaces in India, fraud, cyber fraud has now become almost like an epidemic. Why? How bad is the problem and why is it so?
It's pretty simple. Wherever the action is, wherever business happens, bad guys want a piece of action without working hard. Think of it over the past thousands of years, have thieves gone away ever? They haven't. Now it's a digital theft that's happening. Everything is moving online, bad guys are moving online. We talk about fraud at the consumer level, that's an issue, but the reverse attacks at the business levels are big, big issues too. A few months ago we had a ransomware attack on UnitedHealth Group, it's like a Fortune 5 company, and they ended up paying some ransom amount and even after that, the losses incurred by the business are estimated to be in the $3 billion range. $3 billion of losses. I mean people couldn't get their prescriptions filled, I mean it was that bad. Things are happening. There's another thing you probably read about, United States telecom carriers are infested with some of these Chinese malware, infested with them. So you're going to see attacks, issues in three areas: ransomware or fraud for businesses or consumers. Number two, countries trying to steal intellectual property such as jet engine technology or rocket technology or say vaccination technology. And the third is national defense, where countries want to get into each other's airspace. That's where Chinese hackers are in the middle of US telecom. So these things will keep on happening, but cyber needs to step up and businesses are stepping up. I was in India in December, had a chance to sit down with our Prime Minister Mr. Modi and it was great to see his view. He said we have been focused on digitizing India, it's happening very well, now we need to make cyber as a number one priority because the more digitization happens, the bigger the risk.
I want to ask you, as one of the leading experts in this space and your company is pretty much a cutting edge company in this space, did the world wake up too late to the threat posed by depending on one country and particularly China's telecom products and allowing them to proliferate across networks just for lower cost?
Not quite. I would say yes, lower cost drove many, many countries to adopt that, but that part is only one piece of risk. The risk comes from many, many sides of it. US doesn't have a lot of Huawei technology deployed, still the bad actors are able to get in. A lot more proactive defenses need to be done. Here is the problem: the bigger businesses and government organizations have a lot of inertia, they take time to move. We're still using 30-year-old technology for cybersecurity. What is that? It's firewalls and VPNs to build a castle so my castle is good. Yeah, once someone gets in the castle, you have no defense, no defense. That's where Zscaler came in. We pioneered zero trust architecture where everyone is untrusted. We don't let you get inside the castle and roam around. If you need to go, we escort you to a meeting room, your meeting happens, we escort you back out. It's a one-to-one access. That technology is being picked up around the globe. That's what's driving Zscaler growth as well. India has adopted this technology quite well as well. Probably majority of the large Indian companies are working with Zscaler, embracing this technology at almost the same pace that American companies are. I have not seen that in the past. India used to lag behind, but India is doing great. I feel so proud of the way innovations are happening. Some of these Indian companies that are competing at the world stage, our global system integrators are doing a great job as well.
In fact, that was going to be my next question in terms of how ready and prepared is India for both state actors, non-state actors, and thieves as you put them. But you seem to suggest that as far as India is concerned, companies, they have woken up to the challenge. Large private companies are doing quite well. Small companies don't have enough understanding and awareness. A lot of data, Mr. Chaudhry, resides in government setups in India because of the nature of government, both at the state and the central level. Many of our large national databases are only government-owned. Are they cognizant of the risk in your reading?
So we are having lots of conversations with Indian government at the central level and the state level. There's some active projects going on, but government needs to move faster. My discussion with Mr. Modi was that we are making progress on cyber, but it needs to accelerate and state and central government need to move faster. But the bureaucracy and some of those things slow it down.
Is it just inertia or is there also a cost issue?
Cost is actually less of an issue. I'll tell you why. There's so many old legacy technologies deployed out there. When you go in with zero trust architecture, you remove a lot of them. So when actually we do cost analysis, the amount of stuff removed is far more costly than the new technology to be bought. It's more of inertia that we need to overcome and it's understanding and awareness. It's like having a good insurance policy. You pay to insure against the risk, right? And you don't crib about that, right?
So what advice would you give to policy makers and others who may still not have fully understood this challenge and prepared their corporations, their entities to meet this challenge?
Yeah, the government does two kind of things. One, they can say regulation, regulation, and India has done decent amount of regulation. If government does too much regulation, it stops adoption of technology and businesses. So stay kind of on the middle path when it comes to regulation, do not over regulate. But the other thing I think Indian government could do is what US did four years ago when Biden administration came. They put a policy in place that said my federal agency must embrace zero trust architecture and get out of the traditional approach. And they gave a time frame, two years, three years or so. A lot of progress got made. Are they all the way there? No, but they made a lot of progress. I think Indian government really pushed for the same kind of change, otherwise things will sit there and the risk of other nations who really are adversaries of India is high.
In the world of AI, do these challenges increase? And if they do, given the nature of AI, do they pose even greater challenges?
So AI is a wonderful technology, AI is a dangerous technology, just like any, both coexist, two sides of the same coin. It can answer so many questions, solve so many problems. But this is what AI does to attack a corporation: bad guys had to find all the firewalls, VPNs, applications, where are they? It may have taken them weeks to do it. Now you can ask ChatGPT that information, you can get it in 30 seconds or so. So it's easy to find your attack surface. And once you get in, AI can help you find which of the systems are most important that you should be attacking. So it's becoming easier. But at the same time, companies like Zscaler are also taking advantage of AI to find those things, to find a needle in a haystack where a bad guy may be hiding to kick them out. So I think companies have better technology. The risk remains inertia. Will enterprises adopt them fast enough or will they be slow? Because hackers have no rules, large companies do, and governments have more.
