Layoffs are ‘normal in SaaS’: Sridhar Vembu says there’s a lot of pressure on the cost side

Layoffs are normal in SaaS but that is what Zoho has refused to do, said founder and chief scientist at the company, Sridhar Vembu. The entrepreneur had, earlier this week, said that Zoho had cut down its marketing budget, will not be able to increase pays this year, and that they are doing their best to avoid mass layoffs.

Giving an example of Airtable, a SaaS competitor that is laying off a large part of its team, Vembu said, “This is normal in SaaS. This is what we have refused to do.”

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Vembu said when AI productivity enables smaller teams, employees are retrained to be deployed on new products or to help customers better. “Our business is growing but there is a lot of pressure on the cost side (data center and AI costs). We have chosen a different approach than VC-funded and public companies. We will see in 2030,” he said.

He had earlier said that the business outlook for software was uncertain, and that AI has increased costs massively mostly due to server prices, data storage and also the increasing use of AI. The geopolitical backdrop has certainly not made things easier. He said Zoho has not increased its employee strength for the past 18 months. “We are in the middle of reinventing ourselves. The next 3-5 years will decide how our reinvention has worked,” he said.

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Vembu’s reference to 2030 indicates the 3-5 year timeline he has given Zoho for the reinvention.

It is not only Airtable, or for that matter Zoho, that’s staring at uncertainty. The entire tech industry is grappling with the rapid effect of AI. Thousands of workers have been fired in the past months in companies including Amazon, Apple, Netflix, Xbox, Oracle, Microsoft, Meta and more.