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Zoho founder Sridhar Vembu cites surging AI expenses and a fourfold rise in server prices as the company holds back salary hikes, warns of a grim software jobs outlook and rejects universal basic income as dystopian
Zoho founder Sridhar Vembu has said the company will not offer its usual salary increases this year, citing rising artificial intelligence (AI) costs, a fourfold increase in server prices and an uncertain business outlook for the software industry.
In a post on X, Vembu said the growing use of AI was pushing up expenses even as the company faced a challenging geopolitical environment. Zoho has cut its marketing budget and is working to control costs, he added.
“I have apologised for not being able to avoid this,” Vembu said, referring to the decision to hold back the usual pay increases for employees.
He also warned that the outlook for software jobs in general was grim, although the company would work to avoid mass layoffs.
“We have not been growing our employee count for 18 months now,” Vembu said, adding that most employees understood the situation. He thanked them for their support as the company navigates the changing business environment.
AI usage pushes up software costs
Vembu identified two key factors behind the rise in costs. Server prices have increased fourfold, he said, raising expenses for the data centres that software businesses depend on. At the same time, the rapid growth in AI usage has led to significantly higher expenditure.
More from Business“The business outlook for software is uncertain and AI has raised costs dramatically,” Vembu said in his post.
Vembu also cited geopolitical uncertainty as a factor weighing on the outlook. Zoho has responded by reducing marketing expenditure and holding back its usual annual salary increases.
Zoho aims to avoid mass layoffs
Despite the difficult outlook, Vembu said Zoho would work to avoid large-scale job cuts.
The company has not increased its employee count for 18 months, according to his post. His warning about software jobs suggests that he expects employment conditions across the sector to remain challenging as businesses adjust to changing technology and cost structures.
The impact of AI on employment remains a key concern for the technology industry. Companies are exploring how automation and AI tools could change workflows, workforce requirements and the skills needed for software development and other technology-related roles.
Vembu did not provide details on the number of employees affected by the salary decision or quantify the overall increase in Zoho’s AI-related expenditure.
Vembu calls universal basic income dystopian
In a separate post on X on Monday, October 12, Vembu criticised the idea of universal basic income (UBI), which proposes providing everyone with a guaranteed income regardless of their employment status.
He described the concept as an “unimaginative and dystopian vision of the intellect-worshipping modern man”.
Vembu argued that AI’s growing capabilities could put a large share of intellectual work at risk, including software development. He pointed to advances in AI’s ability to tackle complex mathematical problems as a sign of how rapidly the technology was progressing.
“Pure mathematics, the highest intellectual activity known to man, is falling to AI. It is a deeply humbling moment. At this point, I would assume that most ‘intellectual jobs’ are at risk. That includes much of software,” he wrote.
UBI has gained attention among technology leaders and economists concerned that AI could automate an increasing number of tasks faster than new employment opportunities emerge. Under the proposal, governments would provide people with a basic income, potentially funded through taxation and a share of the economic gains generated by automation.
Vembu, however, argued that the prospect of widespread technological displacement should not lead society to assume that people would have little to do beyond receiving financial support.
What does Vembu propose instead?
Vembu said people would continue to have meaningful work in areas connected to nature, caregiving, culture and spiritual traditions.
Living in a village, he said, had shaped his view of the question of what humans would do if AI reduced the need for intellectual labour.
He cited activities such as restoring soil and water, raising children, caring for older people, making music, sustaining festivals, participating in sports and practising spiritual traditions.
He argued that these activities could also provide income, allowing people to afford goods and services produced with far less human labour.
Vembu also challenged the economic assumptions underlying UBI, arguing that the concept implicitly envisaged a concentration of productive assets in the hands of a few firms.
“The UBI future implicitly assumes monopolisation of the means of production and sovereign states already have the power to disallow monopolies,” he wrote.
His argument places the ownership of productive resources and the distribution of economic gains at the centre of the debate over AI and employment, rather than treating guaranteed income as the primary response to job displacement.
Zoho’s next three to five years
Vembu said Zoho was in the middle of reinventing itself, with the next three to five years likely to determine whether the transformation succeeds.
“The next 3-5 years will decide how our reinvention has worked,” he said.
The company’s immediate challenge is to manage rising technology costs and an uncertain business outlook while attempting to avoid large-scale layoffs. Its longer-term task is to adapt to a software market in which AI is changing product development, operating expenses and the nature of work.
