Daybreak Why Zoho is opting out of the cloud-AI industrial complex
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Sep 14, 2025 Discover how a major SaaS player is challenging the status quo by rejecting the 'cloud and AI tax.' Zoho is crafting its own AI models and data centers to support small and medium enterprises. Unlike competitors relying on third-party services, Zoho’s homegrown approach aims to keep costs down while managing risks. Tune in to learn about the innovative strategies and potential pitfalls Zoho faces in building AI from scratch.
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Rejecting The Cloud-AI Price Squeeze
- Zoho refuses to accept the “cloud and AI tax” that can raise SaaS prices by up to 40%.
- It aims to keep CRM and suite prices far below rivals by avoiding third-party cloud AI fees.
Zoho's Long-Term Frugality Play
- Zoho has historically prioritized frugality and built data centers since 2018 in India, the US, and Europe.
- The company grew margins from ~7% in COVID years to nearly 30% while sticking to in-house infrastructure.
AI Drives Hidden Operational Inflation
- Generative AI adoption raises cloud and GPU costs, sometimes doubling hosting expenses.
- Those rising costs force price-sensitive markets, like India, to resist pass-through price hikes.