Zoho freezes annual pay hikes, cuts marketing spend amid rising AI costs

Zoho founder Sridhar Vembu has announced that there will be no salary hikes for employees this year amid a rise in artificial intelligence (AI) infrastructure costs.

In a post on X, Vembu explained that the advent of artificial intelligence (AI) systems that require a lot of compute has resulted in a four-fold increase in server prices.

“The business outlook for software is uncertain and AI has raised costs dramatically with a) massive four-fold increase in server prices which we need for data centres b) AI usage increasing rapidly, leading to much higher expenses, which we are trying to control,” Vembu said in his post.