Zoho employees will not receive their usual annual pay rise in 2026, co-founder and chief scientist Sridhar Vembu has said, blaming the rising cost of the hardware behind artificial intelligence. In a post on X, the billionaire said the price of the servers Zoho uses in its data centres had gone up fourfold, while a difficult geopolitical climate had added to the pressure.
The pay freeze is one of several steps the Chennai-based software group has taken to hold down costs. Zoho has trimmed its marketing budget, and its headcount has not grown for 18 months, a long pause for a business that has expanded steadily since it was founded as AdventNet in 1996. Vembu apologised to staff for the decision and said most of them understood the reasons for it, thanking them for their support. The company has not said how many employees the freeze covers.
On jobs, Vembu offered some reassurance to his own workforce but struck a gloomy note about the industry. He said Zoho would “work hard to avoid mass layoffs”, and no cuts have been announced. For the sector as a whole, he described the outlook for software jobs as “grim”. He also said the company was partway through reinventing itself, and that the next three to five years would probably decide whether that effort succeeds.
Zoho is an unusual case among Indian technology firms. It is privately held and has grown without outside investors, and Vembu and his siblings own a majority of it. He stepped down as chief executive in January 2025, handing the group chief executive role to co-founder Shailesh Kumar Davey, and moved into the chief scientist post to concentrate on research and development, including AI. The company sells cloud software for accounting, customer relationship management and email, and runs its own data centres, which leaves it directly exposed to the price of server hardware. The move adds Zoho to a growing list of software companies rethinking their spending as AI changes their cost base. Wider adoption of AI tools has pushed up computing bills across the software-as-a-service industry, and Vembu said usage of AI within Zoho was rising quickly, bringing costs the company is trying to contain. Staff now face at least a year without the raise they have come to expect, while the founder bets that the reinvention he describes can absorb those costs without the job cuts he has said he wants to avoid.
