No Increments as Zoho Battles Rising Costs
Zoho founder Sridhar Vembu has announced that the company will skip its annual performance appraisals and salary increments in 2026, citing mounting business pressures and a determination to avoid mass layoffs. The decision has sparked debate across India’s technology sector, particularly because Vembu has simultaneously urged Indian professionals in the United States to return home and contribute to the country’s development.
The controversy raises a difficult question: can India attract experienced technology professionals from abroad when domestic companies are themselves struggling to maintain compensation growth and employment stability?
Vembu’s Plan: Protect Jobs Before Pay Increases
Vembu said Zoho had reduced its marketing expenditure and would suspend its usual compensation review this year. Apologising to employees, he attributed the decision to slower business growth, rising server costs and sharply increasing expenditure on artificial intelligence (AI).
He also revealed that Zoho had not expanded its workforce for 18 months, describing the broader outlook for software employment as “grim.” Nevertheless, the company intends to work towards avoiding mass layoffs, although Vembu acknowledged that this was an objective rather than a guarantee.
The decision reflects the growing financial pressures facing software companies as they invest heavily in AI infrastructure while navigating uncertain enterprise spending.
Why Employees and Social Media Critics Objected
The announcement attracted criticism because of Vembu’s earlier appeal to Indian professionals in America to return and help build the domestic economy. Critics questioned the practical appeal of reverse migration when a prominent Indian software company was freezing increments and attempting to protect existing jobs.
The principal concerns include:
· Career uncertainty: Returning professionals may struggle to find positions matching their overseas experience and compensation.
· Salary pressures: A freeze on increments raises concerns about employees’ purchasing power and career progression.
· AI-driven disruption: Automation and rising technology costs are reshaping workforce requirements across the software industry.
The criticism reflects a broader concern: India may have substantial long-term potential, but skilled professionals also need immediate employment opportunities and financial security.
Vembu’s Defence: Build Opportunities, Not Just Jobs
Vembu rejected the suggestion that India lacks opportunities, arguing that there are “a million things to build in India.” His vision extends beyond conventional software employment to entrepreneurship, manufacturing, infrastructure, education and healthcare.
He has also urged Indians facing uncertainty over US immigration pathways to consider returning rather than remaining in precarious circumstances. The suspension of certain PERM labour-certification applications involving technology companies has added urgency to this debate.
However, building new enterprises requires capital, market access, infrastructure and time. Returning professionals cannot be expected to replace established employment with entrepreneurship without considering these practical constraints.
The Real Test: Can India Turn Talent into Opportunity?
Zoho’s decision highlights the tension between protecting jobs today and investing in tomorrow’s growth. If the company avoids major layoffs and resumes expansion, its approach may demonstrate the value of prioritising employment stability over immediate pay increases.
Ultimately, Vembu’s appeal will be judged not simply by the opportunities India could create, but by the opportunities professionals can realistically access. Attracting returning talent requires a stronger ecosystem of well-paying jobs, innovation, investment and viable businesses. India’s ambition to become a technology powerhouse must translate into tangible career prospects for those willing to build its future.
(With agency inputs)
