Zoho will not give employees their usual annual salary hike this year. Founder Sridhar Vembu announced the decision in a post on X. He blamed rising AI costs, a fourfold jump in server prices and geopolitical uncertainty.
Spending Cuts Across the Business
Vembu said Zoho has cut its marketing budget and is trying to hold down costs as AI usage grows. He pointed to higher server prices for data centres and the rising cost of heavier AI use. The business outlook for software is uncertain, he said, and AI has raised costs sharply.
A Grim Outlook for Software Jobs
Zoho will work hard to avoid mass layoffs, Vembu wrote. But he called the outlook for software jobs in general grim. The company has not grown its headcount for 18 months.
An Apology to Employees
Vembu said he has told staff that the usual pay increase is not possible this year. He apologised for not being able to avoid it. He thanked employees for understanding. He added that Zoho is reinventing itself. The next three to five years will likely decide how that effort turns out.
Costs Rise Across the Tech Industry
Zoho is not alone in facing higher infrastructure costs. Rising server and memory prices and heavy spending on data centres have made it costlier to build and run AI products.
In August, Vembu said the IT industry, including Zoho, had not created many jobs in recent years. Money that would have gone to hiring was going to AI and data centre infrastructure instead. He said the industry must find ways to create jobs for India’s growing workforce.
