India, Oct. 16 -- 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.

Vembu's concern is that while AI has made software easier to build, running a software business is getting more expensive. At the same time, AI coding tools and agents are challenging traditional subscription and per-seat pricing models.

Another concern, as per Vembu, is that AI-driven productivity gains in software developme...