Sridhar Vembu, chief scientist and co-founder at Zoho
Chennai: Zoho has paused hikes for its employees and is cutting down marketing spend due to cost inflation, rising AI-related expenses and challenging geopolitical and market conditions, said the company’s founder and chief scientist, Sridhar Vembu.
The next 3-5 years will decide how our reinvention has worked. Zoho Corporation reported Rs 3,191 crore in net profit for the 2024-25 fiscal year, which is a 3% decline compared to the previous year. Its revenue stood at Rs 13,544 crore for FY25, up 21%. Zoho’s revenue in India increased 47%YoY in FY26, according to Vembu.
In a post on X this Tuesday, he said that AI usage has driven up costs significantly amid a challenging geopolitical environment. He said company will work hard to avoid mass layoffs. We have also told our employees that we cannot have our usual pay increase this year. I have apologised for not being able to avoid this,” Vembu said. On a grim note, he said, “We are in the middle of reinventing ourselves. Sridhar Vembu said there are multiple headwinds, including conflict in the Middle East and oil prices are impacting their business in fast-growing markets like Saudi Arabia, UAE, and other countries in the Middle East, while the US market is facing headwinds from geopolitical developments. “We grew slower than last year but growing nicely,” he said.
“We have cut down on our marketing budget. He further added that the outlook for software jobs in general is grim. He noted that overall expenses have risen dramatically, largely driven by massive increases in data centre and AI usage costs, which the company is actively trying to control. Please pray for us. During Zoho’s annual event in September, Vembu acknowledged that AI spending, macroeconomic headwinds, and global conflicts were impacting the company’s margins. He also emphasised the risk of customers replacing SaaS vendors by building the software completely in-house, but added that has not happened.
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