Zoho co-founder and chief scientist Sridhar Vembu told employees on 13 October that the company would not be giving its usual annual salary increases this year, citing a sharp rise in AI-related infrastructure costs and an uncertain business environment for software.
In a post on X, Vembu said data centre server prices had risen fourfold and that rapidly growing AI usage was pushing operating expenses higher. Geopolitical uncertainty was adding further pressure, he wrote.
"The business outlook for software is uncertain and AI has raised costs dramatically," Vembu wrote. He said the company had already cut its marketing budget and apologised to staff for being unable to avoid the pay freeze.
Zoho, which employs more than 18,000 people, has not added to its headcount for 18 months, Vembu said. He pledged that the company would "work hard to avoid mass layoffs", but said the outlook for software jobs in general was grim.
Vembu described Zoho as being in the middle of reinventing itself, adding that the next three to five years would determine how that effort played out.
The announcement is notable because Zoho is privately held and bootstrapped, giving Vembu unusual latitude to speak candidly about cost pressures that listed peers seldom discuss in such direct terms. For software professionals, it illustrates how AI investment rather than cutting costs is currently driving up expenses for even well-established product companies, with pay and headcount absorbing the impact.
Source : Sridhar Vembu
