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Zoho has reportedly cancelled its usual appraisal review and pay increase for the year. Co-founder Sridhar Vembu attributed the decision to an uncertain software-business outlook and rising costs tied to AI and data centers. He said Zoho would work to avoid mass layoffs, but did not rule them out.
What Zoho announced about appraisals and pay
In reports published October 13, 2026, Zoho was described as cancelling its usual appraisal review for the year, meaning employees would not receive the customary pay increase. India Today and Mint reported the decision as a change to this year’s compensation approach; neither report said that layoffs had already taken place.
Vembu also said the company had cut its marketing budget. These measures come as he described Zoho as being in the middle of reinventing itself, with the next three to five years determining how that effort develops. That timeline is his forecast, not a guaranteed outcome.
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Why Vembu says Zoho is under pressure
Vembu attributed the decision to an uncertain outlook for software businesses, rising AI-related costs, higher data-center server prices, and a challenging geopolitical environment. Mint and India Today reported his explanation; the cost claims have not been independently established in those accounts.
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He said server prices had increased fourfold, but the reports do not specify the comparison period, market scope, or baseline for that figure. He also said AI use was growing rapidly and increasing expenses. These statements describe Vembu’s explanation for Zoho’s decision, not a verified measure of costs across the technology industry.
Does Zoho plan mass layoffs?
Vembu said, “We will work hard to avoid mass layoffs but the outlook for software jobs in general is grim,” as quoted by India Today on October 13, 2026. The pledge to work to avoid layoffs is not a guarantee that none will happen. He also said, “We have not been growing our employee count for 18 months now.” India Today and Mint reported that statement, but neither provided an independent headcount series.
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How Vembu connects Zoho’s decision to India’s jobs outlook
In comments reported August 2, 2026, Vembu widened the issue beyond Zoho. He said India faces a significant challenge creating jobs for its young population, and argued that the IT industry, including Zoho, had not created many jobs in recent years. He said money that might otherwise go toward new employees was being spent on AI and data-center costs, according to Business Today and Business Standard.
Vembu also questioned whether an already saturated global software market needs much more software when AI can make development faster. Business Today quoted him asking, “While AI allows us to produce more software quicker, does the over-saturated global software market need a lot more software?” This is his argument about demand and employment, not a settled forecast that software demand or hiring will necessarily fall.
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Where else could jobs come from?
Vembu questioned which other industries could absorb workers if technology hiring slows. He argued that extensive automation could limit employment in large-scale manufacturing. That is his view of the challenge; it does not establish that manufacturing or other sectors cannot create jobs.
The August comments and October compensation decision are related but distinct: the appraisal change is a company-specific action, while the jobs discussion is Vembu’s broader interpretation of employment pressures facing India. Mint’s report also described wider industry changes, including a shift toward digital and AI skills in reported TCS hiring; that context should not be mistaken for a direct explanation of Zoho’s decision.
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What the “million things to build” wording establishes
The phrase “a million things to build” is not verified in the October reporting or the August reports cited here. It should not be treated as a confirmed direct quotation from Vembu or as a description of a known event. The attributable August remarks instead establish a broader concern: how India can create jobs for its young population if IT hiring slows and AI changes the economics of software work.
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