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Zoho founder Sridhar Vembu announced that the company is canceling employee appraisals this year due to soaring AI server costs and an uncertain software outlook
Zoho has decided to cancel appraisals this year (Image for representation)
Zoho founder Sridhar Vembu said Tuesday that the company is struggling to control costs due to rising Artificial Intelligence (AI) prices, adding that it has decided to cancel appraisals this year.
Writing on X, Vembu underlined that AI server prices have risen “dramatically”, witnessing a massive fourfold increase. He revealed that the homegrown company had been trying to cut costs in different segments, including marketing.
“The business outlook for software is uncertain and AI has raised costs dramatically with a) massive 4-fold increase in server prices which we need for data centers b) AI usage increasing rapidlyleading to much higher expenses, which we are trying to control”, said the Zoho founder.
The business outlook for software is uncertain and AI has raised costs dramatically with a) massive 4-fold increase in server prices which we need for data centers b) AI usage increasing rapidly, leading to much higher expenses, which we are trying to control.On top of that is the challenging geopolitical backdrop.
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 apolgized 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.
Most of our employees understand the situation. I am thankful to them.
We are in the middle of reinventing ourselves. The next 3-5 years will decide how our reinvention has worked. Please pray for us 🙏
— Sridhar Vembu (@svembu) October 12, 2026
He also highlighted the challenges associated with the current geopolitical scenario, provided that energy prices are unstable in the wake of the US-Iran war.
“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 apolgized for not being able to avoid this”, he said.
‘We Will Work Hard To Avoid Mass Layoffs’
Sridhar Vembu said the company would “work hard” to avoid mass layoffs, while also revealing that no hiring had been done in the past 18 months.
“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.”
“Most of our employees understand the situation. I am thankful to them. We are in the middle of reinventing ourselves. The next 3-5 years will decide how our reinvention has worked. Please pray for us”, he added.
Across the tech industry, many giants, including Amazon, Oracle, Microsoft and TCS, have laid off thousands of workers in recent months. These layoffs are largely driven by artificial intelligence (AI) integration and automation and economic uncertainty.
Quick Answers
Ask News18Zoho canceled appraisals and usual pay increases because the company is struggling to control rising costs driven by a dramatic fourfold increase in AI server prices, rapidly increasing AI usage expenses, and an uncertain software business outlook.
Ask News18About the Author
A Journalism graduate, Meemansa Shekhawat is a sub-editor at News18. Driven by a keen interest in news, she is a passionate writer with specialisation in national and international affairs. You can re…Read More
October 13, 2026, 4:19 PM IST
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