New Delhi: Multinational tech company Zoho Corp will not give employees annual pay increases this year, founder and chief scientist Sridhar Vembu said in a post on social media platform X, citing Artificial Intelligence (AI) costs, server prices and the geopolitical backdrop.
“The business outlook for software is uncertain and AI has raised costs dramatically,” Vembu wrote. He said the company had seen a “4-fold increase in server prices which we need for data centers”, while AI usage was “increasing rapidly, leading to much higher expenses, which we are trying to control”.
The company has cut its 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,” he wrote.
On jobs, Vembu said: “We will work hard to avoid mass layoffs but the outlook for software jobs in general is grim.” Zoho has not grown its employee count for 18 months, he said, adding that “most of our employees understand the situation”.
“We are in the middle of reinventing ourselves. The next 3-5 years will decide how our reinvention has worked. Please pray for us,” he wrote.
Costs flagged earlier
Vembu has raised the issue before. In August, he said the infotech industry, including Zoho, had avoided large-scale layoffs but had not created many new jobs in recent years, as money that would have gone to hiring was going to AI and data centre costs. Around the same time, he cited a report that memory prices had risen 500 per cent in 12 months, writing: “We have held back from raising prices but it is becoming hard.”
Industry data shows the same trend. Market researcher TrendForce reported a record 90 percent quarterly jump in server DRAM prices in the first quarter of 2026, followed by a 53 percent to 58 percent rise in the second quarter, with a further 13 percent to 18 percent increase expected in the third. Enterprise server prices have risen 15-30 percent, with memory now making up about 35 percent of system build cost.
The post comes days after Vembu asked Indians in the US to return home. On 8 October, a day after the US Department of Labor suspended TCS, Infosys, Wipro, HCLTech, Cognizant, Capgemini, Microsoft and Adobe from the Permanent Labour Certification programme—the first step in employer-sponsored green cards—Vembu wrote that Indians had contributed to America’s technology, adding: “Yet, a big part of America no longer wants us.” His message ended: “Come back, let’s build India.”
In a follow-up post, he said the return of talent from abroad had been part of the rise of economies such as China, Taiwan, South Korea and Japan.
It is a theme he has returned to. After the US announced a $100,000 fee on new H-1B visas in September 2025, he told H-1B holders to come home, and in April this year he published an open letter to Indians in America asking them to return. Some users responded at the time that asking people to return without addressing infrastructure and work culture was not practical.
The two posts—one inviting professionals back, one saying Zoho has not added staff in 18 months and that software job prospects are “grim”—came within the same week.
Vembu founded AdventNet in 1996 with his siblings and friends; it was renamed Zoho in 2009. He moved to Tenkasi in Tamil Nadu in 2019 and stepped down as chief executive in January 2025 to become chief scientist. Zoho is privately held and has not raised external funding. It reported operating revenue of Rs 8,703 crore for FY23.
(Edited by Nardeep Singh Dahiya)
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