Business · Companies · 6 hrs ago
Zoho freezes annual pay increases as AI costs rise
Zoho will skip its usual annual pay increase this year, cofounder and chief scientist Sridhar Vembu said.
He blamed sharply higher server prices and rising AI expenses, which are adding to the company’s costs.
Zoho has also cut its marketing budget and has not increased its employee count for 18 months.
Vembu said the company would work to avoid mass layoffs, but warned that the outlook for software jobs is grim.
Zoho is trying to control expenses while facing uncertainty in the software business and a challenging geopolitical backdrop.
Vembu said the next three to five years will test Zoho’s reinvention.
Zoho will not give employees its usual annual pay increase this year, cofounder and chief scientist Sridhar Vembu said.
Vembu said sharply higher server prices and rising AI usage costs were putting pressure on the company.
Zoho has cut its marketing budget and will work to avoid mass layoffs, he said.
The company has not grown its employee count for 18 months, according to Vembu.
He said the next three to five years would show how Zoho’s reinvention had worked.
- Who
- Zoho employees are affected; the decision was announced by cofounder and chief scientist Sridhar Vembu.
- What
- Zoho will not provide its usual annual pay increase this year.
- When
- This year; Vembu announced the decision on October 12, 2026.
- Where
- Not stated.
- Why
- Vembu cited sharply higher server prices, rising AI usage expenses and an uncertain software business outlook.
This story does not have two clearly opposing sides.
Vembu said Zoho was gaining customers worldwide and cited growth of about 45% to 50% in India.
Vembu announced that Zoho could not provide its usual pay increase this year and said the company had cut its marketing budget.
- Pay increases
- Usual annual increase will not be given this year
- Server prices
- Four-fold increase, according to Vembu
- Employee count
- Zoho has not grown its employee count for 18 months
- India growth
- About 45% to 50%, cited by Vembu in September
- Reinvention period
- Three to five years
What people are saying
We will work hard to avoid mass layoffs but the outlook for software jobs in general is grim.
The business outlook for software is uncertain and AI has raised costs dramatically.
We have also told our employees that we cannot have our usual pay increase this year.
The next 3-5 years will decide how our reinvention has worked.
Posts on X
The business outlook for software is uncertain and AI has raised costs dramatically with a) massive 4-fold increase in server prices which we need for data centers b) AI usage increasing rapidly, leading to much higher expenses, which we are trying to control. On top of that is
Sources
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