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Zoho freezes salary hikes as AI infrastructure and server costs surge

Zoho Corporation has paused employee salary increments for 2026, citing escalating artificial intelligence expenses, soaring server costs, and an uncertain economic climate as it works to avoid mass layoffs.

A colorful Zoho logo featuring red, green, blue, and yellow blocks in front of a curved glass office building.
Image: @analyticsinme

Software giant Zoho Corporation has put employee salary increments on hold for 2026 as it navigates swelling expenses linked to artificial intelligence and infrastructure. Founder and co-founder Sridhar Vembu cited growing AI development costs, a fourfold increase in server prices, an uncertain business outlook, and geopolitical pressures as reasons for adopting a cautious stance.[1][2][3][4][5]

Alongside the pay freeze, Zoho has cut back its marketing expenditure and kept its total workforce size unchanged for the past 18 months. Vembu noted that the company is trimming operational costs to avoid mass layoffs, though he expressed broader concerns regarding software jobs. In comments regarding the cost pressures, Vembu appealed, "Please pray for us."[1][2][3][6]

The decision drew swift criticism across social media platform X. Observers pointed out that the salary freeze arrived only days after Vembu publicly urged Indian tech professionals working in the United States to return home.[7]

Key facts

  • Zoho Corporation has paused annual employee salary hikes for 2026.
  • Founder Sridhar Vembu cited growing AI expenses, a fourfold surge in server prices, and geopolitical conditions as drivers of the decision.
  • Zoho has kept its overall workforce size unchanged for 18 months and reduced its marketing budget.
  • Vembu stated the cost reductions are aimed at avoiding mass layoffs, while remarking, 'Please pray for us.'
  • The hike freeze faced backlash on X after occurring days after Vembu urged Indian tech workers in the US to return to India.

Sources 路 5 sources

  1. AI

    Analytics Insight@analyticsinmePost on X 路

    饾悪饾惃饾悺饾惃'饾惉 饾悋饾悽饾惈饾悽饾惂饾悹 饾悘饾悮饾惍饾惉饾悶 饾悮饾惂饾悵 饾悘饾悮饾惒 饾悈饾惈饾悶饾悶饾惓饾悶 饾悞饾悽饾悹饾惂饾悮饾惀 饾悮 饾悕饾悶饾惏 饾悘饾悺饾悮饾惉饾悶 饾悷饾惃饾惈 饾悎饾惂饾悵饾悽饾悮'饾惉 饾悞饾惃饾悷饾惌饾惏饾悮饾惈饾悶 饾悎饾惂饾悵饾惍饾惉饾惌饾惈饾惒 Zoho has paused salary hikes for 2026 and kept its workforce size unchanged for 18 months as AI costs rise. Co-founder Sridhar Vembu says the company is cutting costs to avoid mass layoffs. With server prices rising and AI spending growing, Zoho鈥檚 move raises a bigger question: how will India鈥檚 software firms balance AI investment, employee pay, and job security? #Zoho #SridharVembu #ArtificialIntelligence #IndianITIndustry #TechNews #AI #Jobs #SoftwareIndustry #analyticsinsight #analyticsinsightmagazine Read More 馃憞 https://t.co/Rv6r17RsLz

    Open source
  2. MI

    Mint@livemintPost on X 路

    Sridhar Vembu, founder of software giant Zoho Corporation, is taking a cautious approach amid an uncertain business outlook and rising artificial intelligence (AI) infrastructure costs. The company has put its annual salary hikes on hold and cut back on marketing expenditure. https://t.co/UHoCmNC70h

    Open source
  3. IN

    Inc42@Inc42Post on X 路

    馃捀 Zoho Employees May Miss Their Usual Salary Hikes This Year As AI Costs Rise. Founder Sridhar Vembu cited rising AI expenses and a fourfold increase in server prices behind the decision. Zoho has also cut its marketing budget and reportedly kept its workforce unchanged for 18 months. As businesses race to adopt AI, the cost of developing and running these features is rising. Vembu has also raised concerns about software jobs, while saying Zoho will try to avoid mass layoffs. 馃挕 Are workers bearing the cost of the AI boom? Tell us in the comments! #Zoho #SridharVembu #ArtificialIntelligence #TechIndustry #Reels #Inc42 #fyp

    Open source
  4. MI

    Mint@livemintPost on X 路

    Zoho Corporation co-founder Sridhar Vembu has announced that the company will not offer salary increments to employees this year, citing rising costs and the growing expenses associated with artificial intelligence (AI). https://t.co/w2CvhQEDSz

    Open source
  5. ET

    Economic Times@EconomicTimesPost on X 路

    Zoho skips pay hikes, cites raised AI costs and geopolitical backdrop https://t.co/l3QelXjvey

    Open source
  6. MI

    Mint@livemintPost on X 路

    'Please pray for us', says founder Sridhar Vembu as Zoho cancels pay hikes amid cost pressures WATCH: https://t.co/xnfwcazCfp @PVS0512 | @Zoho | @svembu https://t.co/e5LSUBoZNr

    Open source
  7. TI

    The Indian Express@IndianExpressPost on X 路

    Zoho founder Sridhar Vembu faced sharp criticism on X after freezing employee salary hikes, citing rising AI expenses, just days after urging Indian tech professionals in the US to return home. https://t.co/e0OJI2TDq3

    Open source