Zoho halts 2026 salary hikes, looks to ‘avoid mass layoffs’ amid surging AI costs

Zoho, a major software-as-a-service (SaaS) company, has decided to freeze annual salary hikes for all employees in 2026 due to rising AI infrastructure costs and an uncertain software market. Co-founder and chief scientist Sridhar Vembu stated that the company is actively working to avoid mass layoffs and has reduced its marketing budget to rein in spending.

Vembu noted that Zoho has not hired new employees in 18 months, highlighting the bleak state of the software jobs market amidst the AI boom. The company, which employs over 19,000 people worldwide, has cited several factors contributing to the pay freeze, including a 4-fold increase in server prices, growing AI adoption, and geopolitical challenges.

Vembu expressed gratitude to employees for understanding the situation and acknowledged the uncertain outlook for software jobs in the coming years. The decision to freeze salary hikes joins a growing list of tech companies implementing similar measures to offset the capital being invested in AI infrastructure.