Zoho Freezes Pay Hikes and Cuts Marketing Budget as AI Costs Surge

Software major Zoho is freezing annual salary hikes for all employees in 2026 as soaring artificial intelligence costs and an uncertain market put pressure on company spending.

Details And Measures

Sridhar Vembu, the co-founder and chief scientist of Zoho, stated that the firm is working hard to avoid mass layoffs and has trimmed its marketing budget to control expenses. In a post on X, Vembu revealed that Zoho has not hired new employees in 18 months. The company currently has more than 19,000 employees worldwide.

Cost Pressures And Industry Impact

Server prices have quadrupled, driving up the cost of running data centres needed for AI workloads. Growing AI usage, a challenging geopolitical backdrop, and an uncertain software business outlook have added to these financial pressures. Zoho joins a growing list of technology companies taking drastic steps to offset capital poured into AI infrastructure.

Context

The broader software and IT services industry is facing major disruption as AI reshapes traditional business models, with several major firms cutting headcount or slowing recruitment. Industry watchers note that companies are heavily investing in computing power to keep pace with rapid technological changes.