Zoho’s Sridhar Vembu calls SaaS layoffs ‘normal’, bets on reinvention by 2030

Software as a service, or SaaS, means customers use software hosted and maintained by the provider instead of installing and managing it themselves. Companies generally earn recurring revenue through subscriptions, usage fees, or contracts for access to those online tools. This model makes steady customer payments important, but it also creates continuing technology costs.

Zoho sells a broad set of business software, while Airtable provides software that helps teams organize and manage information. Customers pay to use these services, though the article does not give their specific prices or billing plans. Their revenue depends on businesses continuing to use the products.

The article focuses on the cost pressures behind that model. AI use, data storage, and data centers are becoming more expensive. Zoho says its business is growing, but it has not increased employee strength in 18 months. The company is reducing spending and restructuring while trying to protect jobs. Airtable, by contrast, is cited as a SaaS company making job cuts.

Zoho is responding to industry pressure without immediately following the mass-layoff pattern seen elsewhere in SaaS. Founder and chief scientist Sridhar Vembu said the company has reduced its marketing budget and cannot provide its usual salary increases this year. These steps lower spending while Zoho works through a wider business and strategy restructuring.

The company has also paused workforce expansion. Vembu said Zoho has not increased its employee strength during the past 18 months. Instead of removing large numbers of employees, Zoho plans to retrain them and move them into new products or customer-facing roles when AI changes how much work teams can handle.

The approach reflects a difficult financial environment. Zoho’s business is growing, but data-center and AI costs are putting pressure on the cost side. Vembu said the company is reinventing itself, with the next three to five years expected to show whether that strategy works. He also pointed to 2030 as a key horizon.

The article reports that thousands of workers have been laid off in recent months across major technology companies. It names Amazon, Apple, Netflix, Xbox, Oracle, Microsoft, and Meta. No more precise total is provided, so the scale can only be stated as thousands rather than as an exact figure.

These layoffs show that the disruption extends beyond one company or one narrow software category. SaaS companies such as Zoho and Airtable are navigating changing productivity levels, rising technology expenses, and uncertain business conditions. Airtable is mentioned in connection with job cuts, while Zoho says it is trying to avoid mass layoffs.

The reported scale suggests that technology companies are making broad workforce and cost decisions as AI changes how teams operate. However, the article does not attribute every listed layoff to AI alone. It describes a combination of AI-driven productivity changes, higher AI and infrastructure costs, and a difficult geopolitical backdrop.

Zoho’s alternative to mass layoffs is to treat AI-driven productivity as a reason to move people, not simply remove them. If smaller teams can complete more work, some employees may have fewer tasks in their current roles. Zoho intends to use their skills elsewhere in the company.

Vembu specifically mentioned retraining employees and redeploying them to new products or customer-facing roles. The mechanism is straightforward: AI may increase the amount of work a smaller team can handle, while retrained employees support areas where Zoho still needs people. This connects workforce planning to the company’s broader reinvention.

The plan is being pursued while Zoho faces higher data-center and AI costs. The company’s business is growing, but its employee strength has not increased in 18 months. Vembu said the next three to five years will determine whether the reinvention works. His reference to 2030 marks the longer-term period for judging the strategy.

AI can make software teams more productive, but it also requires computing infrastructure and ongoing processing. Greater reliance on AI can therefore increase spending on servers, data centers, data storage, and AI usage. For a SaaS company, higher revenue does not automatically mean higher profits if these costs rise faster.

Zoho’s founder said the company is growing but faces pressure on the cost side from data-center and AI expenses. He had earlier highlighted server prices, data storage, and increased AI usage. These costs can affect how much money remains after a company pays to operate its services and develop products.

That pressure is shaping Zoho’s decisions. The company has reduced marketing spending, will not provide its usual salary increases this year, and has not expanded employee strength for 18 months. It is also restructuring and trying to avoid mass layoffs. Vembu described the software industry’s outlook as uncertain, with geopolitical conditions making the situation more difficult.

The article presents Zoho as choosing a different path from venture-funded and publicly traded software companies. Vembu contrasts Zoho’s approach with the layoffs described as normal in SaaS. The company is trying to absorb AI-driven changes through spending reductions, retraining, redeployment, and restructuring instead of mass job cuts.

The source does not explain precisely why private control changes Zoho’s decision-making, nor does it provide details about its ownership or financial arrangements. In general, a company with fewer public-market or investor pressures may have more freedom to pursue a longer-term workforce plan, but that broader point is not established specifically about Zoho here.

Zoho still faces the same operating pressures. Its business is growing, but data-center and AI costs are rising. It has reduced marketing spending and frozen usual salary increases. Vembu said the next three to five years, extending toward 2030, will show whether Zoho’s reinvention succeeds.

Technology can help a company complete more work with the same team. If revenue grows while staffing and other resources remain controlled, the difference can improve profitability. Productivity gains do not require immediate job cuts because employees can support new products, customers, or business priorities created by the extra capacity.

Zoho’s proposed mechanism is retraining and redeployment. When AI allows smaller teams to perform more work, affected employees could move into new products or customer-facing roles. Their original tasks may become faster or smaller, but their experience can still contribute elsewhere. This turns productivity into a possible source of expansion rather than only a reduction in headcount.

The approach is not cost-free. Zoho says AI and data-center expenses are increasing, even as its business grows. It is therefore reducing marketing spending, withholding usual salary increases, and restructuring. The company has not expanded employee strength for 18 months and will assess its reinvention over the next three to five years.