Zoho pauses annual pay increases amid rising costs

Zoho will not provide its usual annual pay increase this year and has cut marketing spending as it seeks to control costs, founder Sridhar Vembu said. He said the company was working hard to avoid mass layoffs amid an uncertain outlook for the software industry and rising expenses tied to artificial intelligence and data centers. Vembu announced the measures in a post on X on October 12. He said Zoho had told employees it could not give the usual increase this year and that he had apologized for the decision. The company had also reduced its marketing budget, he said. He attributed the cost pressure to server prices rising fourfold, rapidly increasing AI use and a challenging geopolitical backdrop. The figures and explanations were provided by Vembu; the reports do not independently verify Zoho’s spending or the scale of the price increases. Vembu said Zoho’s employee count had not grown for 18 months and that the company would work hard to avoid mass layoffs. He described the outlook for software jobs generally as grim. His statements indicate that Zoho is trying to limit costs without announcing layoffs; he did not say whether the pay increase would resume next year.