'Outlook For Software Jobs Is Grim': Sridhar Vembu Says AI Usage Is Increasing Rapidly

Zoho founder Sridhar Vembu has warned of an uncertain outlook for the software industry, saying the rapid adoption of artificial intelligence (AI) is pushing up operating costs even as businesses grapple with geopolitical uncertainties and a challenging global environment.

In a post on X on Tuesday, Vembu said, “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.”

He added that 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 apolgized for not being able to avoid this,” the software entrepreneur said.

Vembu said Zoho would work hard to avoid mass layoffs but acknowledged that the broader outlook for software jobs remained bleak.

“We will work hard to avoid mass layoffs but the outlook for software jobs in general is grim,” he said, adding that the company had not increased its employee count for 18 months.

He thanked employees for understanding the situation, indicating that the company was taking steps to manage costs amid an uncertain business environment.

Vembu said Zoho was in the middle of reinventing itself, with the next three to five years likely to determine the success of its transformation. “We are in the middle of reinventing ourselves. The next 3-5 years will decide how our reinvention has worked,” he said.

His comments come at a time when AI is reshaping the software industry, changing how applications are developed, deployed and used. While AI tools can improve productivity and automate tasks, their adoption also requires computing infrastructure and ongoing spending on AI models and services.

For software companies, the challenge is increasingly about balancing the potential productivity gains from AI with the costs of deploying it, while adapting business models to a rapidly changing technology landscape.