Zoho is freezing annual salary hikes for all employees in 2026 as rising AI infrastructure costs and an uncertain software market put pressure on the Software-as-a-service (SaaS) major’s spending.Sridhar Vembu, the co-founder and chief scientist of Zoho, said that the company is “working hard” to avoid mass layoffs and has trimmed its marketing budget as part of its efforts to rein in spending even as growing AI usage pushes up expenses.In a post on X on Tuesday, October 13, Vembu said that Zoho had not hired new employees in 18 months, offering a bleak picture of the software jobs market amid the AI boom.The former CEO of the Chennai-based multinational further said server prices have quadrupled, driving up the cost of running data centres to power AI workloads. Rapid AI adoption is also driving up demand for computing power, forcing companies like Zoho to invest more in servers and data centre infrastructure. Vembu also cited geopolitical challenges as a factor in the pay hike freeze.Zoho joins a growing list of tech companies taking drastic steps such as reining in employee compensation and cutting jobs in order to keep up with the rising costs of investing in and running AI infrastructure.The move also comes amid the so-called ‘SaaSpocalypse’ debate, as AI threatens traditional software business models and puts pressure on India’s $315 billion IT services industry, forcing outsourcing giants such as Tata Consultancy Services (TCS), Wipro, Infosys, and Cognizant to cut costs, rethink pricing and contend with clients bringing more work in-house thanks to AI.Also Read | ‘SaaS is dead’ is counterfactual, ask us again in 10 years: Salesforce heads amid AI Summit 2026“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,” Vembu said.Story continues below this adSo far in 2026, there have been an estimated 644 layoffs at tech companies with 1,93,698 people impacted at a pace of 677 people per day. In 2025, over 245,953 people were impacted by layoffs in the tech sector (674 people per day), according to TrueUp, a tech job-seeking platform that also operates one of the most widely cited tech layoff trackers.Last week, Amazon announced its latest round of job cuts impacting at least 1000 workers following its larger round of layoffs in 2025 which has reportedly affected around 30,000 employees.On the Indian tech workforce, in particular, enterprise giant Oracle recently announced it is shrinking headcount by about 21,000 employees globally, with India-based workers estimated to account for more than half of that reduction, according to a Blind survey.Also Read | Think AI jobs are safer? 66% of India’s AI workers expect layoffsEarlier this year, US-headquartered Cognizant, with a big presence in India, announced it will lay off around 4,000 employees, roughly 1 per cent of its workforce, as part of a major restructuring programme.Story continues below this adTata Consultancy Services (TCS) remains thus far the only Indian IT services provider to have announced mass layoffs in the AI era, implementing cuts of more than 12,000 in 2025. However, like Zoho, other IT giants have flagged that their traditional role as huge hirers of new recruits may be winding down.