Employees at 'Zoho', an indigenous tech service provider, will not get a pay hike this year, co-founder Sridhar Vembu said on Tuesday, noting a rise in operational costs due to AI and uncertainty in the software business. He also urged people to pray for them as the next 3-5 years would decide how they will reinvent themself as a company.
Furthermore, Vembu's statement also hinted at a possible layoff in the near future.
What Are Challenges Zoho Facing AT Business?
In a post on X, the software company co-founder noted two reasons that are affecting Zoho's business outlook--uncertainty around the software business and the impact of Artificial Intelligence (AI).
"The business outlook for software is uncertain, and AI has raised costs dramatically with a) a massive 4-fold increase in server prices, which we need for data centres; b) AI usage increasing rapidly, leading to much higher expenses, which we are trying to control," Vembu says in a post on X.
Why Employees Will Not Get a Pay Hike?
Vembu said that geopolitical concerns are also weighing on the company's business. He said that they have cut their marketing budget and have told employees about a pause in pay increases to make the business sustainable as they are reinventing their business model.
"We have cut down on our marketing budget. We have also told our employees that we cannot have our usual pay increase this year. I have apologised for not being able to avoid this," Vembu writes on X.
Is There A Layoff Ahead?
Vembu does not talk about certain layoffs in the coming time. However, a sentence in his post, 'We will work hard to avoid mass layoffs, ' signals a possible job cut ahead. He also said that software jobs in general are vulnerable.
"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."
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Please Pray For Us: Vembu
He further noted that Most of Zoho's employees understand the situation, and he is thankful to them.
"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 emphasised.
Conclusion
Tech companies across the world are facing uncertainty in keeping their workforce intact amid rapid growth of AI and changes in revenue and business models. Recently, global tech giants like Amazon and Google have done restructuring to their workforce. Other companies like Oracle, Meta and Xbox have let go of a big chunk of their employee base in 2026 so far. Going forward, I think companies will have to restructure themselves according to further expansion of AI and its applications.