Zoho skips annual pay increases, Sridhar Vembu flags grim outlook for software jobs

Zoho has told employees that it will not be able to provide its usual annual salary increases this year, as rising artificial intelligence-related expenses and a fourfold increase in server prices put pressure on costs, co-founder Sridhar Vembu said.

In a post on X, Vembu said the business outlook for the software industry was uncertain, with rapidly rising AI usage adding to expenses and a challenging geopolitical environment further clouding prospects.

"We have cut down on our marketing budget. We have also told our employees that we cannot have our usual pay increase this year," he said. “I have apolgized for not being able to avoid this.(sic)”

Vembu said server prices had risen fourfold, increasing the cost of infrastructure needed for data centres, while growing AI usage was leading to much higher expenses that the company was trying to control.

The company would work hard to avoid mass layoffs, he said, but warned that the outlook for software jobs in general was grim.

"We have not been growing our employee count for 18 months now," he said.

Vembu stressed that Zoho was in the middle of reinventing itself, adding that the next three to five years would determine the outcome of those efforts.

The remarks come days after Vembu urged Indian immigrants in the United States to return to India and contribute to the country's technological development.

"Indians have made a major contribution to America's technological prowess. Yet, a big part of America no longer wants us," he wrote on X, referring to the uncertainty faced by Indians working in the US on visas.

"Come back, let's build India," he added.

Zoho, known for its cloud-based business software, gained wider public attention in India last year following endorsements of its products by several Union ministers.

Its homegrown messaging platform Arattai, which means "casual chat" in Tamil, saw a surge in popularity amid the government's push for the adoption of domestically developed products.

The platform allows users to exchange text and voice messages, make audio and video calls, share photos and documents, host instant or scheduled meetings, and post ephemeral stories.

IT Minister Ashwini Vaishnaw announced that he had switched to Zoho tools for documents, spreadsheets and presentations, and conducted a Cabinet briefing using Zoho Show. Commerce and Industry Minister Piyush Goyal said he and his team had shifted to Arattai, describing it as a "Made in India" product embodying the swadeshi spirit.

In October 2025, Zoho launched new point-of-sale devices under its Zoho Payments division. The devices accept payments, generate bills, print receipts and synchronise records across systems.