Zoho Takes a Different Approach to AI-Driven Workforce Changes
Zoho founder and chief scientist Sridhar Vembu has said the company will prioritise retraining employees over layoffs as artificial intelligence (AI) reshapes the software-as-a-service (SaaS) industry.
His comments came after Airtable announced plans to lay off a significant portion of its workforce, citing its belief that smaller teams can build and deliver products more effectively. Responding to the announcement, Vembu said workforce reductions had become common in SaaS, but Zoho had deliberately chosen a different path.
Vembu said Zoho intends to use AI-driven productivity improvements to move employees into new product teams and customer-facing roles rather than eliminate jobs.
“When AI productivity enables smaller teams, we retrain people to deploy on new products or helping customers better,” he wrote.
Why Is Zoho Facing Financial Pressure?
Although Zoho's business continues to grow, the company is experiencing increasing pressure from operating expenses, particularly those associated with AI infrastructure and data centres.
Vembu has pointed to a substantial increase in server prices and growing AI usage as major cost factors. He has also cited uncertainty in the software industry and challenging geopolitical conditions.
To manage expenses, Zoho has reduced its marketing budget and announced that employees will not receive their usual annual pay increases this year. The company has also kept its employee headcount from growing over the past 18 months while working to avoid mass layoffs.
These developments highlight an important challenge for software companies: AI can improve productivity, but the infrastructure required to develop and operate AI-powered services can also increase costs.
Airtable Layoffs Highlight a Wider SaaS Debate
Airtable's workforce reduction has renewed discussion about how software companies should respond to AI-driven productivity gains.
Some companies are restructuring teams to operate with fewer employees, arguing that smaller teams can move faster and deliver products more efficiently. Zoho, by contrast, says it plans to retrain employees and redeploy them to emerging products and customer support.
The difference reflects two approaches to AI adoption: using automation primarily to reduce staffing requirements or using productivity improvements to expand what existing teams can accomplish.
Neither approach guarantees long-term success. The results will depend on business growth, employee skills, customer demand and the cost of maintaining AI infrastructure.
“We Will See in 2030”: Zoho's Long-Term Strategy
Vembu indicated that Zoho's approach should be judged over the longer term rather than by immediate financial outcomes.
The company is in the process of reinventing itself for an AI-driven software market, and Vembu has suggested that the coming three to five years will determine whether its strategy succeeds.
His statement, “We will see in 2030,” captures the long-term nature of the company's decision to prioritise employee redeployment while managing rising costs.
What This Means for the Future of SaaS Jobs
Zoho's strategy highlights a key question for the technology industry: will AI primarily replace jobs, or will it change the responsibilities employees perform?
Retraining can help companies retain institutional knowledge and prepare employees for new roles. However, it requires investment in learning, workforce planning and the development of new products and services.
For SaaS businesses, the challenge is to balance AI adoption, infrastructure spending, employee development and sustainable growth.
Zoho's progress toward 2030 will offer a useful case study in whether a workforce-focused approach can remain viable as AI transforms software development and customer service.
