Zoho Cuts Marketing Spend, Puts Annual Salary Hikes on Hold Amid AI Costs
Zoho Corporation has stopped yearly wage increases and cut marketing expenses as it confronts increasing AI infrastructure costs and software industry uncertainties. “Server prices have gone up four times, which has increased operational expenses,” founder Sridhar Vembu stated.
Founder Sridhar Vembu announced on October 13 that homegrown tech giant Zoho Corporation has halted yearly salary rises and cut marketing spending. The step is taken due to the unpredictable software sector outlook and the rapidly increasing expenses of artificial intelligence (AI) infrastructure.
The software industry's job market is "grim" according to a post by Vembu on the social media site X. In addition, he said that the business had avoided major layoffs by maintaining a flat staff over the last 18 months. The software industry's future is cloudy, according to Vembu, and artificial intelligence has significantly driven up prices. In the first place, the company's data centers require servers, and the price of those servers has increased fourfold. Secondly, Zoho is attempting to control the fast increasing expenses that have resulted from the usage of AI.
Zoho Navigating Through Troubled Waters
According to Vembu, these operational demands have been made much worse by a difficult geopolitical environment. Vembu detailed the company's internal actions to overcome the challenges, saying that they have communicated the salary freeze to their employees and reduced marketing spending. The firm's marketing budget has been reduced, he said.
The company has also informed its workers that they will not be receiving their annual rise this year. "I have apologised for not being able to avoid this," Vembu said. He assured us that the firm will do all in its power to prevent layoffs, "but we should be prepared for a very bleak future in the software industry." As Vembu pointed out, the business is currently undergoing a period of self-reinvention. The success or failure of its renovation will be determined in the following three to five years.
Tech Layoffs Common Practice of Tech Firms in 2026
There have been 644 tech company layoffs so far in 2026, affecting 1,93,698 individuals at a rate of 677 per day. The tech sector laid off more than 2,45,953 people in 2025, or 674 people every day, according to TrueUp. One of the most referenced tech layoff tracks is run by TrueUp, a platform that helps people find jobs in the software industry. The most recent wave of layoffs announced last week by Amazon affected at least 1,000 staff; the company had previously laid off 30,000 people in a larger round in 2025.
Oracle, an enterprise software company, has announced a worldwide reduction in headcount of around 21,000 people, with employees in India accounting for about half of that cut. As part of a massive restructuring initiative, US-headquartered Cognizant—which has a substantial staff in India—announced earlier this year that it will lay off approximately 4,000 workers, or about 1% of its headcount.
