"Based on the current economic environment and our focus on keeping costs in line with revenues, we have decided that providing annual salary increases would not be in the best interests of the company or our shareholders," Yahoo! spokesperson based in the US Kim Rubey said in an e-mail.

Rubey noted that the freeze on salary hikes would be "in place through 2009".

The latest move comes in less than two weeks after Carol Bartz took over as the Yahoo! Chief Executive from its founder Jerry Yang.

In 2008, Yahoo!'s global headcount stood at 15,000 and of them, around 1,500 employees are in India.

"This decision is consistent with our broader focus on strategically reducing Yahoo!s costs, an effort that has been underway for some time now. The decision was based on the current economic environment and our focus on keeping costs in line with revenues," Rubey said.

The company is scheduled to announce its fourth quarter and full year results on Tuesday.

Faced with worsening economic conditions, many companies worldwide including car firm Avis Budget Group Inc, technology entity Advanced Micro Devices and engine manufacturer Cummins Inc, have resorted to holding back pay hikes, as part of their initiatives to slash expenses.

Even US President Barack Obama immediately after assuming office last week, announced freeze on salary hikes for White House employees earning over 1,00,000 dollars.

Last October, Yahoo! announced reduction of about 10 per cent of its workforce to cut expenses.

"The goal is to reduce its current annualised cost run rate of approximately 3.9 billion dollars by more than 400 million dollars before the end of 2008," the Internet major had said in October.

"(since) The majority of expenses are headcount-related, Yahoo! expects to reduce its global workforce by at least 10 per cent during the fourth quarter of 2008," it had added.

On the other hand, Yang had come under fire in the wake of the Internet major's reluctance for the USD 47.5-billion takeover offer from Microsoft, forcing the software giant to walk away from the bid. Later, the much talked-about proposed advertising deal with Google also collapsed.

The appointment of sixty-year-old Bartz, who was most recently the executive chairman of software maker Autodesk, is widely expected to help in turning around the fortunes of Yahoo!

"There is no denying that Yahoo! has faced enormous challenges over the last year, but I believe there is now an extraordinary opportunity to create value for our shareholders and new possibilities for our customers, partners and employees," Bartz said earlier this month.

"The goal is to reduce its current annualised cost run rate of approximately 3.9 billion dollars by more than 400 million dollars before the end of 2008," the internet major had said in October.

"(since) The majority of expenses are headcount-related, Yahoo! expects to reduce its global workforce by at least 10 per cent during the fourth quarter of 2008," it had added.

On the other hand, Yang had come under fire in the wake of the Internet major's reluctance for the USD 47.5-billion takeover offer from Microsoft, forcing the software giant to walk away from the bid. Later, the much talked-about proposed advertising deal with Google also collapsed.

The appointment of sixty-year-old Bartz, who was most recently the executive chairman of software maker Autodesk, is widely expected to help in turning around the fortunes of Yahoo!