Zoho pauses salary hikes amid AI costs

# Zoho pauses salary hikes amid AI costs Source: [https://www.linkedin.com/news/story/zoho-pauses-salary-hikes-amid-ai-costs-8766105](https://www.linkedin.com/news/story/zoho-pauses-salary-hikes-amid-ai-costs-8766105) [Novinston Lobo](https://in.linkedin.com/in/novinston-lobo) ### Novinston Lobo Published Oct 14, 2026 Zoho has paused annual salary hikes for its employees this year as it manages surging costs tied to AI and a tough macroeconomic environment,[reports The Times of India](https://timesofindia.indiatimes.com/technology/tech-news/zoho-founder-sridhar-vembu-warns-employees-of-tough-times-ahead-says-no-hike-this-year-trying-to-avoid-layoffs/articleshow/134906916.cms)\. Founder Sridhar Vembu cited a fourfold jump in server prices for data centres and rising operational expenses from AI tools as primary financial drivers, along with complex geopolitical headwinds\. “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,” Vembu said in a post on social media\. --- ## Editors’ Picks --- 1. Zoho just told its employees there will be no salary hike this year\. The reason isn’t a failed product or a lost customer\. It’s AI\. Sridhar Vembu says the server prices Zoho needs for its data centers have gone up 4x\. Four times\. At the same time, AI usage inside the company is growing fast, and so is the bill that comes with it\. So Zoho has to cut its marketing budget\. Paused annual pay increases\. Kept headcount flat for 18 months\. They apologised to employees for it\. Publicly\. He also said they will work hard to avoid mass layoffs\. But he called the outlook for software jobs in general “grim\.” That’s the part that stays with me\. We keep hearing that AI makes building software cheaper and faster\. Maybe it does\. But running it at scale is a different story\. The cost is quietly moving from people to compute\. And when compute gets expensive, the first place a company looks is its payroll, its hiring and its growth budget\. Vembu says Zoho is in the middle of reinventing itself, and the next 3 to 5 years will decide whether it works\. That’s a founder being honest about the trade\-off most companies haven’t said out loud yet\. If AI infrastructure costs keep climbing, what gets squeezed first at tech companies: salaries, hiring or margins? Note: Purely informational\. No criticism of Zoho intended\. Respect to Vembu for being this transparent\. 3. No raise this year\. But no mass layoffs either\. Would I take that deal? 💸 Because that's the trade Zoho is making with its people right now\. Co\-founder Sridhar Vembu posted on X that Zoho won't give its usual annual pay hikes this year\. His reason: AI\. 📈 Server prices: up 4x\. Zoho runs its own data centres\. 🤖 AI usage: growing fast, and so are the bills\. 📉 Marketing: budget cut to save money\. He says they haven't added staff in about 18 months\. They'll try hard to avoid mass layoffs\. And he called the outlook for software jobs "grim\." We all talk about AI taking our jobs\. This is quieter\. AI is eating your raise budget first\. If Zoho's feeling it, smaller software companies probably will too\. 💬 Be honest\. A 0% hike with a safe job, or a normal hike with layoff risk? Which would you pick? Zoho Sridhar Vembu Be10x[\#Zoho](https://www.linkedin.com/login?session_redirect=https%3A%2F%2Fwww.linkedin.com%2Ffeed%2Fhashtag%2Fzoho&trk=news_storyline_guest-text)[\#TechJobs](https://www.linkedin.com/login?session_redirect=https%3A%2F%2Fwww.linkedin.com%2Ffeed%2Fhashtag%2Ftechjobs&trk=news_storyline_guest-text)[\#Salary](https://www.linkedin.com/login?session_redirect=https%3A%2F%2Fwww.linkedin.com%2Ffeed%2Fhashtag%2Fsalary&trk=news_storyline_guest-text)[\#ArtificialIntelligence](https://www.linkedin.com/login?session_redirect=https%3A%2F%2Fwww.linkedin.com%2Ffeed%2Fhashtag%2Fartificialintelligence&trk=news_storyline_guest-text)[\#be10x](https://www.linkedin.com/login?session_redirect=https%3A%2F%2Fwww.linkedin.com%2Ffeed%2Fhashtag%2Fbe10x&trk=news_storyline_guest-text) 4. Zoho's CEO apologized yesterday: "No pay hike\. Outlook for software jobs is grim\. "Same week Amazon cut jobs in India to invest in AI\. But Naukri's survey of 540\+ HR leaders says 79% still plan to create NEW jobs in next 6 months\. Contradiction? No\. Transition\. 𝐎𝐥𝐝 𝐫𝐨𝐥𝐞𝐬: Support replaced by chatbots, junior coding replaced by vibe\-coding\. 𝐍𝐞𝐰 𝐫𝐨𝐥𝐞𝐬: Prompt engineer, AI ethics, AI \+ Business analyst\. As HR, the hardest part is not layoffs\. It's telling a 5\-year experienced employee that his skill expired\. 𝐇𝐢𝐫𝐢𝐧𝐠 𝐢𝐧 𝟐𝟎𝟐𝟔 𝐢𝐬 𝐧𝐨𝐭 𝐚𝐛𝐨𝐮𝐭 𝐡𝐞𝐚𝐝𝐜𝐨𝐮𝐧𝐭\. 𝐈𝐭'𝐬 𝐚𝐛𝐨𝐮𝐭 𝐬𝐤𝐢𝐥𝐥𝐜𝐨𝐮𝐧𝐭\. 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