Zoho Corporation has decided to freeze annual salary hikes for its employees as artificial intelligence infrastructure costs and a slowing software market put pressure on finances. Founder and chief executive Sridhar Vembu explained that server prices have surged nearly 400%, sharply increasing data centre expenses. Rising AI adoption has further added to costs, forcing Zoho to cut its marketing budget by 50% to manage spending.
Vembu admitted the decision was tough and apologised to employees, thanking them for their patience. He stressed that Zoho will focus on survival and reinvention over the next three to five years. Despite the salary freeze, Vembu assured that the company will work hard to avoid mass layoffs. However, hiring has remained stagnant for the past 18 months, reflecting weak demand in the software industry.
Zoho is now concentrating on reinventing itself to remain competitive in a market disrupted by AI and global uncertainties. Vembu urged resilience, noting that the coming years will decide whether Zoho’s transformation succeeds. The move highlights wider challenges across the technology sector, where rising costs and slower growth are forcing firms to rethink strategies.
