Zoho chief executive Sridhar Vembu issued an apology to staff after informing them that neither performance reviews nor pay rises would take place during the current year. The decision affects the privately held technology company, which ranks among India's largest enterprises by scale.
Vembu pointed to the growing adoption of artificial intelligence in software development as a factor behind the company's deceleration in growth. His written account noted that while Zoho continues to expand at roughly 12 per cent annually, the pace of that expansion fell off more steeply than anticipated during September, with new revenue streams and customer intake bearing the brunt of the deceleration.
A portion of the customer base, he noted, had begun replacing Zoho software with tools built entirely through AI-generated code — a practice known as "vibe coding," where straightforward text prompts drive development rather than conventional programming methods.
In a statement to staff, Vembu expressed regret that neither a compensation review nor an annual appraisal would be taking place that year. He conveyed that the loyalty shown by employees would not be taken for granted, and that he felt a genuine sense of regret at having fallen short of expectations.
Vembu, whose company's product portfolio centres on business software, expressed a commitment to rethinking the organisation's direction as a path toward reviving expansion. A document cited in the report notes that generative AI tools are placing pressure on the market positions held by long-standing software vendors.
AI coding assistants have lowered the barrier enough that organisations can assemble tailored tools at a fraction of the former cost and time, with people outside technical roles sometimes able to reproduce portions of a product — or the whole thing — independently.
Vembu has addressed on multiple occasions how artificial intelligence is reshaping the nature of software work. He placed potential productivity gains for developers somewhere in the fourfold-to-tenfold range, drawing a parallel between the shift and the transformation that mechanised textile production brought during the industrial revolution.
Wariness about placing too much dependence on AI has also been part of his stated position. He has argued that engineers should deploy these tools while retaining thorough knowledge of the underlying code and bearing accountability for its outputs.
On the topic of job displacement, Vembu argued that universal basic income carries inherent flaws, describing the policy direction as "dystopian." His stated focus has shifted toward human behaviours shaped by environment, upbringing, cultural practices, and spiritual tradition.
The communication does not include a concrete roadmap, stopping at Vembu outlining his thinking around how Zoho might reshape its operations and return to an upward growth trajectory. No adjustments to Zoho's offerings or operating structure have been put forward in the wake of these developments. The organisation has not disclosed which workers fall under the hiring pause or when it might end.
