New Delhi | October 14, 2026
Zoho Corporation founder Sridhar Vembu has announced that the company will pause its usual annual salary increases this year, citing rising artificial intelligence (AI) infrastructure costs and uncertainty in the software industry. The company has also reduced its marketing expenditure as it attempts to manage expenses and avoid large-scale layoffs.
The announcement has drawn attention to the financial pressures facing software companies as AI transforms product development, infrastructure requirements and the wider technology employment market.
Who Is Sridhar Vembu?
Sridhar Vembu is an Indian entrepreneur and the founder of Zoho Corporation, a software company known for its cloud-based business applications, customer relationship management tools and productivity software.
He established AdventNet in 1996 with his co-founders. The company later introduced the Zoho brand in 2005 and was renamed Zoho Corporation in 2009. Vembu stepped down as group CEO in 2025 and subsequently served as the company’s chief scientist, focusing on research and technology development, according to published reports.
Why Has Zoho Paused Salary Increases?
Vembu attributed the decision to sharply increasing technology infrastructure costs. He said server prices had risen fourfold, while growing AI usage had significantly increased operating expenses.
The company is also facing an uncertain outlook for the software business, alongside geopolitical challenges. Vembu said Zoho had reduced its marketing budget and had not increased its employee headcount for 18 months. He apologised to employees for being unable to provide the usual pay increases this year.
Zoho Aims to Avoid Mass Layoffs
Vembu said Zoho would work hard to avoid mass layoffs despite the difficult business environment. However, he warned that the outlook for software jobs in general was challenging.
He also indicated that the company was undergoing a major transformation to adapt to the changing technology landscape. According to Vembu, the next three to five years will be important in determining the success of this reinvention.
AI Changes the Economics of Software Businesses
The situation highlights a complex challenge for software companies. While AI can help businesses automate tasks and develop products faster, operating advanced AI services can require substantial computing power, data-centre capacity and ongoing infrastructure investment.
Companies must therefore balance investment in new AI capabilities with operating costs, employee compensation and customer acquisition.
Zoho’s decision illustrates how the AI transition can affect not only technology strategies but also salary policies, marketing budgets and workforce planning. The company has not confirmed that mass layoffs will take place.
