Zoho Freezes Salary Hikes, Cites AI Costs as Software Job Outlook Turns Grim

Sridhar Vembu, founder of Zoho, confirmed on X on Tuesday, October 13, that employees will not receive the usual salary hike this year. He said Zoho has not hired new employees in 18 months and described the software jobs outlook as grim.

Vembu attributed the decision to rising AI costs, including what he called a four-fold increase in server prices for data centres and rapidly increasing AI usage. He said the company has cut its marketing budget and told employees the usual pay increase cannot happen. He wrote that Zoho will work hard to avoid mass layoffs, but the software job market outlook is grim.

Days earlier, on October 9, Vembu had urged Indians working in the US on visas to consider returning to India. In that post he wrote:

Indians have made a major contribution to America’s technological prowess. Yet, a big part of America no longer wants us.

The earlier appeal pointed to the uncertainty faced by visa holders and called their return a bold new future. The contrast between that appeal and the announcement on pay and hiring drew sharp criticism on X. Users questioned what concrete opportunities returning professionals would have if companies were struggling to expand.

One user asked what returning Indian professionals could expect if the software industry is creating fewer jobs and Zoho is struggling to protect existing employment. Another said the hiring situation and uncertainty over layoffs made the appeal less reassuring. A third wrote that the company had been calling H1B holders back to India while youth unemployment remains high, and now the founder was saying he will work hard to avoid layoffs.

Not all responses focused on the contradiction. Some users urged Vembu to involve employees in finding solutions. One wrote that employees should be asked for a way out because their own survival is at stake. Vembu thanked employees, writing, "Most of our employees understand the situation. I am thankful to them."

The exchange captures a specific workplace contradiction. A company asks skilled workers abroad to return to a home job market while it is not growing its own employee count and has paused pay progression. The cost argument is internal and specific to Zoho, but the recruitment message was aimed outward at a talent pool being invited to build the same economy. When the invitation meets frozen wages and a shrinking hiring line, the welcome loses its substance.

A public invitation to return loses its weight when the company making it is not growing headcount and has paused pay progression.