Zoho salary freeze signals AI pressure on software firms
Zoho will not give its employees salary hikes this year and has cut its marketing budget, co-founder and chief scientist Sridhar Vembu said in a 13 October post on X. The company also has not been growing its employee count for 18 months.
The move comes as Zoho faces pressure from AI-driven automation and rising costs. Zoho’s net profit fell 3% in FY25 while employee costs rose 29%. Its filings for FY26 were not available at press time.
What Zoho does
Founded in 1996 in New Jersey, US, Zoho makes email, enterprise resource planning and workplace software for businesses. The company employs more than 30,000 people and reported ₹12,313 crore in operating revenue and ₹3,191 crore in net profit in FY25.
AI-driven pressures on software firms
Software firms have come under pressure as AI automates an increasing range of business processes. Vembu said AI usage was increasing rapidly, leading to higher expenses, while server prices needed for data centres had risen four-fold.
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Kashyap Kompella, founder of RPA2AI Research, said, “With automation lowering the cost of internal technology operations with clients, Zoho may be faced with having to compromise margins to retain clients—thus putting its immediate business at risk.”
Abhisek Mukherjee, managing partner at YCP India, said many of Zoho’s clients are small clients who are not too reliant on custom data and may migrate rapidly to cost-effective solutions due to AI.
Vembu said, “We will work hard to avoid mass layoffs but the outlook for software jobs in general is grim.”
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