Zoho, the Indian business software company, has told its employees it will not give its usual pay rises this year. Its founder, Sridhar Vembu, says artificial intelligence (AI) has driven up the company’s costs.
In a post on X on 12 October 2026, Vembu wrote: “We have also told our employees that we cannot have our usual pay increase this year. I have apolgized [sic] for not being able to avoid this.”
Spotted via @svembu on X
What Vembu said
Vembu wrote that “the business outlook for software is uncertain and AI has raised costs dramatically”, pointing to a “massive 4-fold increase in server prices which we need for data centers” and “AI usage increasing rapidly, leading to much higher expenses, which we are trying to control.”
He added: “On top of that is the challenging geopolitical backdrop.” He said Zoho has also “cut down on our marketing budget.”
On jobs, he wrote: “We will work hard to avoid mass layoffs but the outlook for software jobs in general is grim. We have not been growing our employee count for 18 months now.”
He ended: “We are in the middle of reinventing ourselves. The next 3-5 years will decide how our reinvention has worked. Please pray for us.”
The figures are Vembu’s own; Zoho has not published numbers to back them up. BusinessLine reported the post on 13 October.
A follow-up post
On 13 October, Vembu posted again on X, in a longer thread reported by India Today. He wrote that AI’s productivity gains in software development are “(at best) 25% to 50%” when measured on a finished product.
In the same post, as embedded by India Today, he said server prices are “way up (4-5x in a year for servers) driven by the monster AI data center build out”, and: “So we have revenue growth but costs have grown much much faster.”
His first post put the rise in server prices at four-fold; the second says four to five times in a year.
He also said he expects a much bigger leap in coding productivity to come, which is why “we have called for reinvention internally.”
What this means
- AI is raising costs, not only cutting them. Vembu says the computers and AI services Zoho needs have become much more expensive.
- Staff are paying part of the bill. Employees will not get their usual pay rise, and Zoho has not added staff for 18 months, according to Vembu.
- He is warning the wider industry. Vembu describes the outlook for software jobs in general, not just at Zoho, as “grim”.
Sources
- Sridhar Vembu (@svembu) on X, 12 October 2026. https://x.com/svembu/status/2109770209703920008
- Sridhar Vembu (@svembu) on X, 13 October 2026. https://x.com/svembu/status/2110118670362161348
- BusinessLine, “Zoho says it cannot offer usual pay hikes to employees this year as AI disrupts costs”, 13 October 2026. https://www.thehindubusinessline.com/info-tech/zoho-says-it-cannot-offer-usual-pay-hikes-to-employees-this-year-as-ai-disrupts-costs/article71577942.ece
- India Today, Sridhar Vembu warns software jobs at risk due to AI, 14 October 2026. https://www.indiatoday.in/jobs/story/sridhar-vembu-warns-software-jobs-at-risk-due-to-ai-zoho-making-internal-changes-tchc-3016845-2026-10-14
