Zoho founder Sridhar Vembu has said the company has put annual salary increases on hold this year and cut its marketing budget amid rising costs linked to artificial intelligence (AI), an uncertain business outlook and geopolitical challenges.

In a post on X, Vembu said AI had driven a “massive 4-fold increase in server prices” needed for data centres, while the growing use of AI was also leading to higher expenses for the software company.

“The business outlook for software is uncertain and AI has raised costs dramatically,” Vembu wrote, listing higher server prices and rapidly increasing AI usage among the key challenges facing the company.

Vembu also flagged a difficult outlook for employment in the software industry, while saying Zoho would work to avoid large-scale job cuts.

The Zoho founder added that the company had not increased its employee headcount for the past 18 months.

“Most of our employees understand the situation. I am thankful to them,” he said.

Vembu said Zoho was in the process of reinventing itself, with the coming years likely to determine how successful the transition would be.

“We are in the middle of reinventing ourselves. The next 3-5 years will decide how our reinvention has worked. Please pray for us,” he wrote.

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