Zoho Corporation founder Sridhar Vembu has weighed in on the shrinking software job market, arguing that inefficiencies, not artificial intelligence, are to blame. In a recent post on X (formerly Twitter), Vembu explained that decades of over-expansion, redundant IT systems, and wasteful outsourcing practices have contributed to the precarious situation in the IT services industry.
Decades of Over-Expansion Have Led to Inefficiencies
Vembu points out that venture capital, private equity, and IPO money have flooded the software industry for years, driving companies to over-invest in IT systems. “Fear, uncertainty, and doubt were spread among corporate customers, leading them to overspend on enterprise software, creating bloated IT infrastructures that require excessive human resources,” he explained.
Many of these inefficient systems were outsourced to India, where companies hired large teams to manage complex and redundant IT setups. Instead of addressing inefficiencies, the move multiplied the problem, leading to bloated teams maintaining systems that should have been simplified from the start.
Indian Firms Have Become More Efficient Out of Necessity
Despite these inefficiencies in the global software market, Vembu noted that Indian firms—especially in banking and finance—have become more efficient than their Western counterparts. He attributes this to limited budgets, which forced Indian companies to focus on efficiency rather than excessive spending.
“Indian firms did not have the luxury of large budgets, so they had to be highly efficient,” Vembu said. Today, these firms are cost-effective, agile, and competitive, successfully resisting challenges from global players.
AI Is a Tool, Not the Cause of Job Losses
Vembu acknowledged that AI will improve productivity by automating repetitive tasks, but he rejected the idea that AI is responsible for job losses. Instead, he believes that decades of wasteful spending and input-driven hiring practices are the real culprits.
In the software development industry, Vembu highlights how small, focused teams often outperform large, inefficient teams. He argues that companies should shift away from billable hours and workforce size as key performance indicators, and instead prioritize productivity and results.
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The Industry’s Reckoning Has Begun
According to Vembu, the software industry is now facing a long-overdue correction. With the drying up of easy money in enterprise IT, businesses are being forced to cut excess spending and rethink their approach to hiring and development.
“The flood of money into enterprise IT has now dried up, leaving a serious drought,” he warned, signaling that companies will need to adapt or risk collapsing under their inefficiencies.
For Vembu, the future of software jobs depends not on AI, but on companies making fundamental changes—eliminating unnecessary complexities, focusing on efficiency, and moving away from outdated hiring models.
