Unlike most tech companies preparing to go public, video-conferencing startup Zoom is profitable. One key driver of Zoom’s profitability: a large engineering team in China, where average tech salary is relatively lower than in the U.S.
Zoom’s large R&D presence in China, which is likely made easier by CEO Eric Yuan’s Chinese background, is turning out to be a major cost saver for the video-conference software maker — and reflects an increasingly popular strategy among fast-growth tech companies.
Zoom disclosed in its IPO prospectus last week that most of its product development personnel are based in China. Zoom employs over 500 people across multiple R&D centers in China, which accounts for roughly 30 percent of its total workforce and 70 percent of its non-US-based employees, according to the prospectus.
“Our product development team is largely based in China, where personnel costs are less expensive than in many other jurisdictions,” Zoom wrote in its filing. “If we had to relocate our product development team from China to another jurisdiction, we could experience, among other things, higher operating expenses, which would adversely impact our operating margins and harm our business.”