Zoho founder Sridhar Vembu has announced that the company will suspend annual performance appraisals and salary increments in 2026, prioritising job security amid mounting business challenges. The decision reflects growing financial pressures across India's technology industry, where slowing growth, rising infrastructure costs and increasing AI investments are reshaping corporate strategies.
Vembu attributed the salary freeze to sluggish business growth, escalating server expenses and substantial investments in artificial intelligence. Zoho has reportedly avoided workforce expansion for 18 months, highlighting uncertainty surrounding software employment. While the company aims to prevent mass layoffs, Vembu acknowledged that employment stability cannot be guaranteed indefinitely.
The announcement has triggered criticism, particularly because Vembu previously encouraged Indian technology professionals working in the United States to return home and contribute to India's economic development. Critics question whether returning professionals can secure competitive salaries and meaningful career opportunities when established domestic technology companies are freezing compensation and limiting recruitment.
Defending his position, Vembu emphasised India's enormous potential across entrepreneurship, manufacturing, healthcare, education and infrastructure. He believes returning professionals can create businesses rather than depend exclusively on conventional employment. However, transforming entrepreneurial ambition into sustainable enterprises requires investment, supportive policies, market access and an ecosystem capable of absorbing experienced global talent.
The larger concern extends beyond Zoho's compensation strategy to India's ability to balance AI-driven transformation with employment generation. As automation reshapes traditional software services, companies must invest in workforce reskilling while protecting financial sustainability. Ultimately, India's ambition to attract global talent will depend on creating competitive employment opportunities, supporting innovation and ensuring that technological advancement translates into sustainable economic growth.
