"Pray For Us": Zoho Founder Sridhar Vembu Says No Pay Hikes This Year Amid AI Cost Surge

Zoho founder Sridhar Vembu has said the business outlook for the software industry is uncertain, citing rising costs due to artificial intelligence (AI) and a challenging geopolitical situation. He said the company has cut its marketing budget and informed employees that they will not receive their usual pay increases this year.

In a post, Vembu explained that AI has significantly increased the company's expenses. He said server prices have increased fourfold, adding to the costs of running data centres. He also noted that the rapid rise in AI usage has led to much higher expenses, which the company is trying to control.

Along with rising costs, the challenging geopolitical backdrop has added to the uncertainty surrounding the business.

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The business outlook for software is uncertain and AI has raised costs dramatically with a) massive 4-fold increase in server prices which we need for data centers b) AI usage increasing rapidly, leading to much higher expenses, which we are trying to control. On top of that is the challenging geopolitical backdrop. 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 apolgized for not being able to avoid this. 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. Most of our employees understand the situation. I am 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 🙏

— Sridhar Vembu (@svembu) October 12, 2026

Vembu wrote, "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."

"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," he added.

Vembu thanked employees for understanding the situation, saying that most of them understood the challenges the company was facing.

He also said Zoho was in the middle of reinventing itself, adding that the next three to five years would determine how successful the reinvention had been. He ended his post by asking people to pray for the company.