Rising AI’s Costs Put SaaS Companies Between A Rock And A Hard Place

Recently, Zoho cofounder Sridhar Vembu raised concerns over the economics of building software in an AI-driven market. In a post on X, Vembu said server prices have risen 4-5X in a year, while AI usage and token expenditure are pushing up operating costs. Zoho, however, plans to respond by cutting its marketing budget, freezing headcount for 18 months and pausing its usual salary hikes this year.