India | October 13, 2026

Zoho has paused its usual annual salary increases for 2026 as the software company seeks to control rising costs linked to artificial-intelligence workloads and an uncertain outlook for the software sector. Co-founder Sridhar Vembu described the decision in a social-media post, saying the company was working to avoid mass layoffs.

What Zoho has said

Vembu cited a four-fold increase in server prices used for data centres, alongside rapidly rising AI usage and related operating expenses. He also said Zoho had reduced its marketing budget and had not grown its employee headcount for 18 months. These points reflect the company founder’s public explanation, rather than independently audited cost figures.

Zoho’s decision is notable because it connects the AI boom to higher infrastructure expenses as well as new business opportunities. Providers are investing in compute capacity and data centres, while serving AI features can increase ongoing operating costs. Companies must weigh those expenses against customer demand, revenue growth and the cost of retaining staff.

What it means for employees and the tech sector

The freeze means employees should not expect the company’s usual annual pay increase this year, according to the public statement. It is not, by itself, an announcement of mass layoffs. Vembu said the company would work to avoid large-scale job cuts, while describing the outlook for software employment as difficult.

The broader impact will depend on how long infrastructure costs remain elevated, whether AI products generate sufficient revenue and how software companies adjust hiring and spending. A single company’s decision should not be treated as proof that every technology employer is freezing salaries.

Sources

Reporting note: The salary decision and cost explanations are attributed to Sridhar Vembu’s public statements and media reporting.

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