Zoho is freezing annual salary hikes for all employees in 2026, co-founder and chief scientist Sridhar Vembu announced, blaming sharply rising artificial-intelligence infrastructure costs and an uncertain outlook for the software industry.
Vembu made the announcement in a post on X on Monday, saying the company had seen a "massive 4-fold increase in server prices" needed for data centres, alongside rapidly rising AI usage costs that it is trying to control. The media coverage of his post followed on Tuesday.
Marketing budget cut, no layoffs planned
Vembu said Zoho had also cut its marketing budget and apologised to employees for the pay-hike freeze. "We have also told our employees that we cannot have our usual pay increase this year. I have apologized for not being able to avoid this," he wrote.
He said the company would "work hard to avoid mass layoffs" but described the outlook for software jobs in general as "grim". Zoho, which has over 19,000 employees worldwide according to its official website, has not grown its headcount for 18 months.
"We are in the middle of reinventing ourselves. The next 3-5 years will decide how our reinvention has worked. Please pray for us," Vembu wrote, pointing to a "challenging geopolitical backdrop".
Wider AI pressure on IT services
The freeze reflects the broader pressure AI is putting on India's software industry. The Economic Times noted that Vembu had said in September that Zoho was gaining customers worldwide, citing roughly 45–50 per cent growth in India.
The Indian Express framed the move within the "SaaSpocalypse" debate around AI's impact on India's roughly $315-billion IT services industry, noting that TCS cut more than 12,000 jobs in 2025 — the only Indian IT major to announce mass layoffs in the AI era.
Sources:
- Zoho halts 2026 salary hikes, looks to 'avoid mass layoffs' amid surging AI costs — The Indian Express
- 'Please pray for us,' says Sridhar Vembu as Zoho skips pay hikes amid rising AI costs — The Economic Times
Vembu made the announcement in a post on X on Monday, saying the company had seen a "massive 4-fold increase in server prices" needed for data centres, alongside rapidly rising AI usage costs that it is trying to control. The media coverage of his post followed on Tuesday.
Marketing budget cut, no layoffs planned
Vembu said Zoho had also cut its marketing budget and apologised to employees for the pay-hike freeze. "We have also told our employees that we cannot have our usual pay increase this year. I have apologized for not being able to avoid this," he wrote.
He said the company would "work hard to avoid mass layoffs" but described the outlook for software jobs in general as "grim". Zoho, which has over 19,000 employees worldwide according to its official website, has not grown its headcount for 18 months.
"We are in the middle of reinventing ourselves. The next 3-5 years will decide how our reinvention has worked. Please pray for us," Vembu wrote, pointing to a "challenging geopolitical backdrop".
Wider AI pressure on IT services
The freeze reflects the broader pressure AI is putting on India's software industry. The Economic Times noted that Vembu had said in September that Zoho was gaining customers worldwide, citing roughly 45–50 per cent growth in India.
The Indian Express framed the move within the "SaaSpocalypse" debate around AI's impact on India's roughly $315-billion IT services industry, noting that TCS cut more than 12,000 jobs in 2025 — the only Indian IT major to announce mass layoffs in the AI era.
Sources:
- Zoho halts 2026 salary hikes, looks to 'avoid mass layoffs' amid surging AI costs — The Indian Express
- 'Please pray for us,' says Sridhar Vembu as Zoho skips pay hikes amid rising AI costs — The Economic Times
