Zoho Employee Appraisals Cancelled as Sridhar Vembu Cites Rising AI Costs

The industry is in a difficult patch and Zoho is no exception. Founder Sridhar Vembu has stated that the higher AI costs are making it very difficult to manage the cost of the business.

Sridhar Vembu statement on X: As a result Zoho will not be doing any appraisals this year. He issued an apology on X, saying that the company has made a concerted effort to reduce its spend and that in particular it is cutting back on marketing spend. He apologised to the employees who won't be getting appraisals and made it clear that with the marketing budget being cut the staff shouldn't expect any pay rises this year.

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Zoho Employee Appraisals Cancelled | Company Going Through Rough Phase

Vembu also pointed out that the software industry is in a difficult state and Zoho is doing everything it can to avoid any major layoffs. They're absolutely working to prevent any job losses but the software job market in general is not in a good state. Vembu noted that Zoho has in fact kept its headcount flat for the past 18 months.

Zoho mass layoffs: So lots of tech companies (Microsoft, Amazon, Oracle, TCS etc) have been laying people off. Layoffs.fyi has the stats on this and in 2026 alone over 131k tech workers were made redundant. Zoho has seen its popularity grow over the last year, particularly with the Arattai messaging app. Zoho is also facing increased costs as a result of AI. Sridhar Vembu has said the software business environment is currently extremely tough.

Rising AI Costs at Zoho

Zoho Employee appraisals Cancelled: Vembu said the future for software companies is very much in doubt, and that AI has significantly increased costs (data centre server prices up fourfold). He added that the more AI you use, the more expensive it becomes, and that Zoho is actively trying to address that. He also mentioned that the global political situation is making it even harder.

Sridhar Vembu Latest News | Zoho Boss Thanks Staff For Understanding the Situation

Zoho Employee appraisals Cancelled: The Zoho boss has thanked the staff for their understanding in the absence of appraisals this year. Most of the staff are aware of the situation and he really appreciates their understanding. Vembu also pointed out that the cost pressures may not be resolved in the near term and that Zoho will be reinventing itself to deal with the situation, with results taking time.

Zoho Annual Salary Hike Cancellation | Zoho is Working on Re-Invention, Says Vembu

Zoho Employee appraisals Cancelled: Zoho Vembu also stated that Zoho is currently in the midst of a re-invention. He said it will be 3 to 5 years before you can tell whether that re-invention has worked or not. He asked his followers to wish Zoho well. This isn't the first time Sridhar Vembu has spoken about the difficulties Zoho is experiencing as a result of changes in the tech industry.

In August he had noted that memory prices had gone up by as much as 500% in the past year. "Memory prices, along with AI token prices, have made business very difficult," he said at the time. "We have held back from price increases but it is becoming very difficult." The token prices have made doing business very difficult. Zoho have tried to keep the costs down but it's getting harder.

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