'AI Is The Pin That Is Popping This Inflated Balloon': Zoho's Sridhar Vembu On Indian IT Stocks Crash

As Indian IT stocks tumbled following Anthropic's launch of AI-powered coding plugins, Zoho founder and CEO Sridhar Vembu has issued a stark warning about the future of the Software-as-a-Service (SaaS) industry, saying that he has asked his employees to 'calmly contemplate their death' to survive the AI revolution.

In a candid statement responding to the market turmoil, Vembu said, "The stock market is becoming very negative about the prospects of SaaS companies in the AI-assisted Code era. AI is the pin that is popping this inflated balloon."

SaaSpocalypse: 'Fundamentally flawed model'

Vembu, who has long been critical of the venture capital-fuelled SaaS boom, suggested the industry's troubles predate the AI revolution. "Well before the AI revolution, I have said SaaS industry is ripe for consolidation," he noted. "An industry that spends vastly more on sales and marketing than on engineering and product development was always vulnerable."

The Zoho chief argued that "the venture capital bubble and then the stock market bubble funded a fundamentally flawed, unsustainable model for too long."

Zoho's survival strategy

Vembu also spoke about whether Zoho can weather the AI storm. He acknowledged the challenge ahead. "Can Zoho survive the AI wave? It depends on our ability to adapt," he said.

The Chennai-based software company's founder revealed an unusual approach to preparing his team for disruption, "I always ask our employees to calmly contemplate our death. When we accept that possibility, we become more fearless and that is when we can calmly chart our course."

Zoho, which has traditionally eschewed venture capital funding and pursued a bootstrapped growth model, now faces the same existential questions confronting the broader SaaS industry as AI-powered tools threaten to automate tasks that have long required human developers and large software teams.

Market bloodbath hits IT majors

Indian IT stocks witnessed a sharp sell-off this week after Anthropic, the artificial intelligence company behind Claude, unveiled new AI plugins designed to automate coding tasks. The announcement sent shockwaves through the technology sector, with investors fearing significant disruption to traditional software development models.

IT bellwether Infosys saw its shares plunge, whilst Tata Consultancy Services (TCS) and HCL Technologies also faced heavy selling pressure. Indian IT stocks witnessed their worst single-day crash since the March 2020 COVID-19 pandemic, with the Nifty IT index plummeting over 7 percent and wiping out approximately Rs. 2 lakh crore in market capitalisation within hours. 

Published on: Thursday, February 05, 2026, 01:07 PM IST