Zoho cofounder and chief scientist has refused to lay off people at the software as a service (SaaS) firm amid growing challenges from artificial intelligence (AI) and geopolitical uncertainties.
Replying to the news of layoffs at SaaS competitor Airtable, he tweeted, “This is normal in Saas. This is what we have refused to do.”
While Airtable said their decision to sack people was “not a reflection of their work but a reflection of our deep belief that small teams ship more and better”, Vembu said the approach at Zoho is to “retrain people to deploy on new products or helping customers better, when AI productivity enables smaller teams”.
Vembu set 2030 as the year to decide on layoffs, should the need arise.
He added: “Our business is growing but there is a lot of pressure on the cost side (data center and AI costs). We have chosen a different approach than VC-funded and public companies. We will see in 2030.”
In an interview in September to ET AI, when asked about claims that AI agents would kill SaaS, Vembu said Zoho was gaining customers worldwide and cited growth of about 45% to 50% in India.
Rising pressures
Earlier this week, in another tweet, Vembu had announced that Zoho employees would miss out on their annual pay increase this year as rising AI costs squeeze the company. In addition, he said the company did not add to its employee headcount over the last 18 months.
“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,” Vembu wrote.
He had also pointed out that the company has cut its marketing budget and will work to avoid mass layoffs, warning that the outlook for software jobs is grim.
“The business outlook for software is uncertain and AI has raised costs dramatically,” Vembu wrote, pointing to a “massive four-fold increase in server prices” for data centre equipment.
He said AI usage was increasing rapidly, leading to higher expenses the company was trying to control. “We have cut down on our marketing budget. We have also told our employees that we cannot have our usual pay increase this year,” he wrote, adding he had apologised to employees.
Looking beyond the immediate spending decisions, Vembu described Zoho as being in the middle of a reinvention. He said the next three to five years would determine how that effort had worked, setting out a longer period for assessing the company’s changes.
"We are in the middle of reinventing ourselves. The next three-five years will decide how our reinvention has worked. Please pray for us," he wrote.