'The Money That Would Have Gone To New Employees Is Now Going to AI': Zoho's Sridhar Vembu

Zoho founder and chief scientist Sridhar Vembu has said that India's IT industry, including Zoho itself, has largely stopped creating new jobs, with funds that would once have gone towards hiring now being redirected towards artificial intelligence and data centre costs. Vembu made the remarks in a post on X, framing the slowdown in IT hiring as part of a larger question about how India can create jobs for its youth in an increasingly uncertain global economy.

IT industry has stopped adding jobs, says Vembu

Vembu wrote that the real issue facing the country is how to create jobs for its large youth population at a time of global economic uncertainty. He said that the IT industry, including Zoho, has "not created many jobs in recent years," adding that while the company has avoided layoffs, it has also not been hiring at its earlier pace.

According to Vembu, the money that would previously have gone towards new employees is now being absorbed by AI adoption and rising data centre costs, the latter driven by a steep increase in server and memory prices. He said Zoho is trying to control these costs, though a large part of the increase remains outside the company's control.

Software market may not need much more software, Vembu says

Vembu argued that while AI allows companies to produce software faster, the global software market is already oversaturated, raising the question of whether it needs significantly more software at all. He compared the software industry to a commodity business, where the focus increasingly shifts to quality, reliability and brand rather than raw output, resulting in slower overall growth.

He also pointed out that large and mid-sized enterprise customers have been redirecting their own IT budgets towards AI, further limiting the scope for the software services industry to expand hiring. Vembu noted that even the AI companies growing rapidly are borrowing and spending heavily on capital expenditure, and that it remains unclear whether they will generate the scale of profits needed to justify that spending.

Manufacturing automation unlikely to absorb job losses

On whether other sectors could offset the slowdown in IT hiring, Vembu said extensive automation means that large scale manufacturing today produces relatively few jobs. He described this as a positive development from a purely economic standpoint, since automation makes goods, including advanced technology products, more affordable as production costs fall.

The real challenge, according to Vembu, lies in structuring the economy so that people have enough income to afford those increasingly affordable goods. He said this is a simple question in theory but a difficult one in practice.

UBI and political pressure likely to grow, says Vembu

Vembu noted that some view Universal Basic Income as a potential answer to this structural challenge, pointing out that elements of this already exist in India in the form of welfare schemes often described as "freebies." He said political pressure to expand such measures is likely to increase in the coming years, while leaving open the question of whether a better alternative exists. Vembu made the remarks in a post on social media platform X on Sunday.

Published on: Monday, August 03, 2026, 12:19 PM IST