Why Zoho won't offer pay hikes to employees this year
What's the story
Zoho, the software giant founded by Sridhar Vembu, has announced that it will not be giving its usual annual pay hikes this year. The decision comes in light of rising costs and an uncertain business outlook for the software industry. Vembu took to X to explain that the company is currently reinventing itself and that the next three to five years will be crucial for this transformation.
Cost challenges
AI driving up costs
Vembu explained that the software industry's business outlook is uncertain, with AI driving up costs significantly.
He noted a massive four-fold increase in server prices, which are essential for data centers, and rapidly rising AI usage leading to much higher expenses.
"The money that would have gone to new employees is now going to AI and data center costs," Vembu said in August.
Cost control
Zoho cuts down on marketing budget
In light of these challenges, Zoho has cut down on its marketing budget and is working hard to avoid mass layoffs.
The company hasn't increased its employee count in 18 months.
Vembu said most employees understand the situation and thanked them for their support during this difficult time.
He also revealed that he has apologized for not being able to avoid this situation with pay hikes.
Job risks
Vembu's concerns over AI job risks
Vembu has previously expressed concerns over the potential job risks posed by AI.
He said, "At this point, I would assume that most 'intellectual jobs' are at risk. That includes much of software."
He also criticized universal basic income (UBI) as a solution to job displacement by AI, calling it an "unimaginative and dystopian vision of the intellect-worshipping modern man."