Zoho Corporation's Chief Scientist, Sridhar Vembu, has issued a sobering assessment of the current state of the Indian IT industry. Known for his candid views on social media, Vembu recently reacted to the disappointing quarterly results of major IT firms like TCS, Infosys, and Wipro, arguing that the downturn is neither just cyclical nor driven solely by AI and Trump tariffs. According to him, the industry is at the start of a deep and long-term transformation.
Vembu believes the broader software industry has operated inefficiently for decades, supported by an extended asset bubble. These inefficiencies—rooted in bloated systems, over-hiring, and an input-driven billing model—have long been normalised, especially in India. “Our jobs came to depend on them,” he tweeted that a large portion of Indian IT jobs were built on inefficiencies imported from the West.
Previously, in a separate tweet, he had explained that enterprise software has become saturated due to easy VC, PE, and IPO money. Companies were encouraged to spend more on IT, driven by fear of missing out and technological uncertainty. This resulted in Western enterprises creating layers of duplicated, costly systems, which in turn required a large workforce to maintain—often sourced from India.
Vembu emphasised that Indian IT services companies multiplied these inefficiencies further, hiring in bulk due to fixed dollar budgets and low per-capita costs. This practice not only wasted talent but also entrenched unproductive systems. “A two-person team can outperform a 20-person team,” he stressed, lamenting how billing by staff-months removed the incentive to innovate or streamline.
AI, he believes, is not yet the core threat. While it currently offers modest productivity gains (10–20%), it's the years of accumulated inefficiencies that now threaten the software job market. Vembu recalled how previous reckonings—like during the 2008 financial crisis—were averted by monetary easing. However, with today’s funding “drought,” he argues that the day of reckoning can no longer be delayed.
He pointed to Indian banks as a counter-example—lean, efficient, and tech-savvy—because they had no choice but to optimize without inflated budgets. Now, he urges the industry to challenge old assumptions and think afresh. His message is clear: the next 30 years will look nothing like the last, and Indian IT must evolve or risk decline.
Vembu believes the broader software industry has operated inefficiently for decades, supported by an extended asset bubble. These inefficiencies—rooted in bloated systems, over-hiring, and an input-driven billing model—have long been normalised, especially in India. “Our jobs came to depend on them,” he tweeted that a large portion of Indian IT jobs were built on inefficiencies imported from the West.
Previously, in a separate tweet, he had explained that enterprise software has become saturated due to easy VC, PE, and IPO money. Companies were encouraged to spend more on IT, driven by fear of missing out and technological uncertainty. This resulted in Western enterprises creating layers of duplicated, costly systems, which in turn required a large workforce to maintain—often sourced from India.
Vembu emphasised that Indian IT services companies multiplied these inefficiencies further, hiring in bulk due to fixed dollar budgets and low per-capita costs. This practice not only wasted talent but also entrenched unproductive systems. “A two-person team can outperform a 20-person team,” he stressed, lamenting how billing by staff-months removed the incentive to innovate or streamline.
AI, he believes, is not yet the core threat. While it currently offers modest productivity gains (10–20%), it's the years of accumulated inefficiencies that now threaten the software job market. Vembu recalled how previous reckonings—like during the 2008 financial crisis—were averted by monetary easing. However, with today’s funding “drought,” he argues that the day of reckoning can no longer be delayed.
What is ailing the software job market is not AI taking away jobs (not yet anyway).
— Sridhar Vembu (@svembu) March 11, 2025
Here is my thesis, as a participant and observer of software for 30 years. Over those 30 years:
1. Massive over-capacity steadily developed in enterprise software due to a flood of VC, PE and…
He pointed to Indian banks as a counter-example—lean, efficient, and tech-savvy—because they had no choice but to optimize without inflated budgets. Now, he urges the industry to challenge old assumptions and think afresh. His message is clear: the next 30 years will look nothing like the last, and Indian IT must evolve or risk decline.
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