Zoom Expands In India With New Tech Center As Demand Surges

Zoom Video Communications Inc. (ZM) has announced that it is planning to expand its international presence by opening a technology center in Bangalore, India. 

The popular video conferencing service currently houses two data-centers in Mumbai and Hyderabad which also serve as research and development locations. The new location will support Zoom’s engineering division that is based in San Jose, California.

“Zoom is focused on providing the best-unified communications experience in the world and we are thrilled to open a technology center in Bangalore, which will be an innovation hub for our communications platform,” said Zoom President of Product and Engineering Velchamy Sankarlingam, “The talent in India is truly exceptional and we are looking forward to expanding our DevOps, IT, Security, and Business Operations teams here as we scale our operations.”

The expansion comes amidst an astounding increase in Zoom’s customer base in India by 6,700%, with free-user sign-ups for the video service from January to April. According to Apptopia, Zoom saw downloads of its app increase in the country from 170,000 to around 2.5 million between February and March. The increase has been attributed to the impact of the COVID-19 pandemic.

Zoom CEO Eric S. Yuan highlighted the country’s strategic importance to Zoom by saying, “We expect to see continued growth and investment here. We are proud to provide our services for free to over 2,300 educational institutions in India during the COVID-19 pandemic.” He added, “We plan to hire key employees for the technology center over the next few years, pulling from India’s highly-educated engineering talent pool. This facility will play a critical role in Zoom’s continued growth.”

Zoom says that its strategy is to expand globally with cutting-edge communications technology. Last week, the company announced that it is partnering with third-party display manufacturer, DNET to release its own hardware-line entitled Zoom for Home DTEN ME. Zoom also launched “Zoom Room’s Hardware as a Service” earlier this month with a subscription service that provides video conference room accessories and cloud phone products.

On July 8, Morgan Stanley analyst Meta Marshall commented on Zoom’s subscription service saying, “We view this positively for ZM as it increases stickiness of both the Zoom Phone and Rooms products for customers, given it will be more difficult for customers to switch over to a competitive product within meeting rooms as well as for phones.” She also noted that it could indirectly boost another teleconferencing equipment provider, Plantronics (PLT) also known as Poly. She maintained a Hold rating on the shares with a price target of $190 (implying 29% downside potential).

Overall, 11 analysts assign Buy ratings, 8 Hold ratings, and 2 Sell ratings, giving ZM a Moderate Buy Street consensus. The average analyst price target stands at $228.35 suggesting 15% downside potential, with shares up 295% year-to-date. (See Zoom’s stock analysis on TipRanks).

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