New Delhi: Four days after urging Indian techies in the US to return to India, Zoho founder Sridhar Vembu has told his employees that there will be no salary hikes this year, warning that the outlook for software jobs is “grim”.
The company has cut marketing spending and has not increased its headcount for 18 months, as AI-related expenses and server prices rise sharply.
In a post on X, Vembu said the business outlook for software was uncertain, and AI had “raised costs dramatically”. Server prices for data centres had increased four-fold, he said, while the rapid rise in AI usage was adding substantially to expenses that the company was trying to control.
“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 wrote.
The company would “work hard to avoid mass layoffs”, he added, but warned that the broader outlook for software jobs was grim. Zoho was in the middle of reinventing itself, Vembu said, adding that the next three to five years would determine how that effort worked out.
“Please pray for us,” he wrote.
Vembu’s appeal to Indian techies in the US
The announcement has drawn attention to the uncertainty facing software companies as they invest in AI while grappling with rising infrastructure costs. It has also raised questions about Vembu’s recent appeal to Indian technology professionals in the US to return home and help build India’s technology sector.
Responding to the US government’s suspension of major Indian IT companies, including TCS and Wipro, from the Permanent Labour Certification programme (PERM) on 9 October, Vembu wrote that Indians had contributed significantly to America’s technological strength, but that “a big part of America no longer wants us”.
“Let this be the birth pains of a bold new future. Come back, let’s build India,” he wrote.
Also Read: Sridhar Vembu says ‘America no longer wants us’ after US suspends IT firms from PERM
What are the opportunities for returnees?
Fact-checker Mohammed Zubair questioned the practical implications of Vembu’s appeal in a reply to his latest post on X.
“You’d recently tweeted, ‘Come back to India’. If the software industry is creating fewer jobs, and even Zoho is struggling to protect existing employment, what concrete opportunities will returning Indian professionals have?” Zubair wrote.
Vembu has previously warned that AI and data-centre spending could divert resources away from hiring. In August, he said that “the money that would have gone to new employees is now going to AI and data center costs”.
Zoho, a privately held software company headquartered in Chennai, has more than 19,000 employees worldwide according to the company’s official website. It has positioned itself against the mass layoffs seen across parts of the technology industry.
Its latest announcement highlights the pressure that rising AI costs are placing on even established software businesses.
(Edited by Maryam Hassan)