Zoho Corporation founder, Sridhar Vembu, announced on Tuesday that the company has suspended annual salary increases and cut marketing expenses. This decision was driven by a sharp increase in artificial intelligence (AI) infrastructure costs and an uncertain outlook for the software sector.
In a post on the social media platform X, Vembu described the global software labor market as 'bleak.' He also stated that the company's workforce has remained unchanged over the past eighteen months while management has worked to avoid mass layoffs.
Vembu explained that business prospects for software remain uncertain, and AI has significantly increased expenditures. These higher costs are linked both to a fourfold increase in prices for data center servers and the rapid growth in AI usage, leading to higher expenses that the company is trying to control.
Furthermore, operational pressure has been intensified by a complex geopolitical situation. To cope with these difficulties, the company has taken several internal measures, including reducing marketing spending and notifying employees about the salary freeze.
He added: 'We have reduced our marketing budget. We have also informed our employees that we will not be able to provide the usual salary increase this year. I apologize that I could not avoid this,' said Vembu, thanking employees for their understanding of the situation.
Despite efforts to prevent mass layoffs, he noted that 'the prospects for jobs in the software sector overall are bleak.' In conclusion, Vembu stated that the company is undergoing a process of self-improvement, and that the next three to five years will determine the success of this transformation.