Sridhar Vembu warns IT companies have stopped creating new jobs, AI costs are now out of control
India’s IT sector has grown for decades, becoming a key pillar for the economy and jobs. But Zoho founder Sridhar Vembu has claimed that AI
India’s IT sector has grown for decades, becoming a key pillar for the economy and jobs. But Zoho founder Sridhar Vembu has claimed that AI has changed the IT sector, and now, no new jobs are being created. Instead, companies are going all-in on AI. In a post on X, Vembu called this stagnation in job growth to be a real issue for India. “The real issue facing our nation is how to create jobs for our massive cohort of youth in this very uncertain global landscape,” he wrote. Read Full Story Sridhar Vembu acknowledged that while Zoho had not laid off workers, his company had not created many new jobs either. “Sadly, the IT industry, including Zoho, has not created many jobs in recent years. We have not laid off people, but we are not creating new jobs either,” he added. Sridhar Vembu has warned that IT sector is not creating new jobs. (1/2) Sridhar Vembu’s comments come at a time when companies are facing increasing pressure due to AI. Be it Infosys, Oracle, Microsoft or Meta, thousands of IT workers have been laid off in the past year.
To give you some context. According to Xpheno’s Active Tech Jobs Outlook report for August 2026, the IT sector has seen a 6 per cent decline in active job openings compared to a year ago, at 44,000 roles. Though overall openings for tech roles stood at 1,09,000, 6 per cent higher than last year. Money for new employees going to AI The Zoho founder explained that the funds that a company would normally use to hire more people, were now being used to invest into AI tools and datacentres. Vembu added, “The money that would have gone to new employees is now going to AI and data center costs, the latter due to the steep rise in server and memory prices. We are trying to control those costs but a lot of that is out of our control.” Vembu questioned whether the world really needed a lot more software. (2/2) For context, companies like Google, Meta, and Microsoft expect to spend hundreds of billions of dollars in AI this year alone. Indian players like HCL Tech and TCS are also building datacentres in India.
Sridhar Vembu also raised concerns over the rapid use of AI tools to code and create new software. The Zoho chief wondered whether the world was really in need of more and more software. “While AI allows us to produce more software quicker, does the over-saturated global software market need a lot more software?” he asked. He said software was increasingly behaving like a commodity industry, where the focus shifts to “quality, reliability, brand and so on”, and where growth becomes much slower. He also said large and mid-sized enterprise customers were reallocating their IT budgets towards AI. But the Zoho chief was skeptical about whether other sectors could actually step in and create new jobs instead as more automation happens across industries. Vembu wrote, “Extensive automation means that large scale manufacturing produces few jobs.” Universal Basic Income? In the same post, Sridhar Vembu tried to understand how AI may impact the economy in the long run, hinting that this could actually be good for citizens. He explained, “As an economic thinker, this is a good thing: ultimately all kinds of goods, including advanced tech products become very affordable because production becomes so cheap.
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