Zoho employee appraisals cancelled? What Sridhar Vembu actually said about no pay hike this year

Short answer: the search says "appraisals cancelled", but what Vembu actually wrote is narrower: Zoho told employees it "cannot have our usual pay increase this year". He didn't use the word appraisal, and he didn't say anything about bonuses, promotions or reviews. No layoffs have been announced.

What Vembu wrote

The post went up on X at 10:16 PM UTC on 12 October, which was 3:46 AM IST on Tuesday, 13 October. It had passed 10 lakh views by midday. The full text, as quoted by The Indian Express:

"The business outlook for software is uncertain and AI has raised costs dramatically with a) massive 4-fold increase in server prices which we need for data centers b) AI usage increasing rapidly, leading to much higher expenses, which we are trying to control.

On top of that is the challenging geopolitical backdrop.

We have cut down on our marketing budget. We have also told our employees that we cannot have our usual pay increase this year. I have apologized for not being able to avoid this.

We will work hard to avoid mass layoffs but the outlook for software jobs in general is grim. We have not been growing our employee count for 18 months now.

Most of our employees understand the situation. I am thankful to them.

We are in the middle of reinventing ourselves. The next 3-5 years will decide how our reinvention has worked. Please pray for us 🙏"

What it means if you work at Zoho

Zoho is privately held and based in Chennai, so it doesn't publish results the way listed IT companies do. Vembu's post and what employees have been told internally are the only sources so far.

Why the costs went up

Vembu named two specific costs:

• Servers: he says server prices for Zoho's data centres are up four-fold. Zoho runs its own data centres instead of renting all its capacity from cloud providers, so hardware prices hit it directly.
• AI usage: customers and employees are using AI features much more, and every AI query costs money to run.

This isn't new for him. In August he said that "the money that would have gone to new employees is now going to AI and data center costs" (ThePrint).

Why people are angry

The timing. On 9 October, after the US suspended major Indian IT companies, including TCS and Wipro, from its PERM labour certification programme (ThePrint), Vembu urged Indians on US visas to "Come back, let's build India". Four days later he was announcing a pay freeze.

Replies on X, quoted by The Indian Express and ThePrint, asked what jobs returning techies could expect if even Zoho can't protect existing employment. Fact-checker Mohammed Zubair was one of them. At 11:42 AM IST on 13 October, Vembu doubled down in a new post: "When another country tells you to go home, you come home... There are a million things to build in India, even if software is saturated or goes away."

Is this happening elsewhere?

Zoho isn't the only company paying out less this year. TCS withheld this quarter's variable allowance for staff at C3A grade and above, according to a memo reported by Reuters (our explainer), and on 12 October the IMF warned that AI will affect about 40% of jobs (our explainer). Zoho's announcement stands out because it covers the whole company and the founder put his reasons in public.

What you can do

• Zoho employee? Read the official HR communication, and ask your HR partner whether reviews, promotions or bonuses are affected. Vembu's post doesn't say.
• Planning a job switch? A missed increase is a fair point to raise when you negotiate an offer elsewhere. Tell recruiters your current pay and when it was last revised.
• Check your payslip: if your deductions changed this month, the likely reason is the EPF wage ceiling going up, not Zoho's decision. See EPF wage ceiling to ₹25,000: what changes on your payslip.