Zoho CEO Sridhar Vembu has offered an assessment of the current slowdown impacting India's major IT services companies, attributing their challenges more to long-standing internal inefficiencies than external factors like US tariffs or the rapid ascent of artificial intelligence (AI). He also sent a warning, saying that it is only the early stages of a long reckoning.
Vembu’s comments follow a rather ‘disappointing’ quarterly earnings reports from industry giants Infosys, Tata Consultancy Services (TCS), and Wipro, which have fueled concerns about sluggish growth and a potential hiring slowdown across the sector this year.
‘No Trump Tariffs and AI to be blamed’
Reacting to the news, Vembu dismissed the idea that external pressures are the sole culprits. According to his “operating thesis,” he explained, “What we are seeing is not just a cyclical downturn, and it is not just AI-related. Even without the uncertainty induced by tariffs, there was trouble ahead.”
The Zoho chief argued that the broader software industry, including both products and services, has become “quite inefficient.”
“The broader software industry has been quite inefficient, both in products and services. These inefficiencies have accumulated over decades of a prolonged asset bubble. Sadly, we adapted to a lot of those inefficiencies in India. Our jobs came to depend on them. The IT industry sucked in talent that may have gone into manufacturing or infrastructure (for example),” he said in a post on X.
Looking forward, Vembu cautioned that the industry is facing a significant shift.
“We are only in the early stages of a long reckoning. My thesis is that the last 30 years are not a good guide post to the next 30 years. We are truly at an inflection point,” Vembu added.
“We have to challenge our assumptions and do fresh thinking,” he noted.
Vembu’s comments follow a rather ‘disappointing’ quarterly earnings reports from industry giants Infosys, Tata Consultancy Services (TCS), and Wipro, which have fueled concerns about sluggish growth and a potential hiring slowdown across the sector this year.
‘No Trump Tariffs and AI to be blamed’
Reacting to the news, Vembu dismissed the idea that external pressures are the sole culprits. According to his “operating thesis,” he explained, “What we are seeing is not just a cyclical downturn, and it is not just AI-related. Even without the uncertainty induced by tariffs, there was trouble ahead.”
The Zoho chief argued that the broader software industry, including both products and services, has become “quite inefficient.”
“The broader software industry has been quite inefficient, both in products and services. These inefficiencies have accumulated over decades of a prolonged asset bubble. Sadly, we adapted to a lot of those inefficiencies in India. Our jobs came to depend on them. The IT industry sucked in talent that may have gone into manufacturing or infrastructure (for example),” he said in a post on X.
My operating thesis: what we are seeing is not just a cyclical downturn and it is not just AI related. Even without the uncertainty induced by tariffs, there was trouble ahead.
— Sridhar Vembu (@svembu) April 18, 2025
The broader software industry has been quite inefficient, both in products and services. These… https://t.co/hhOA9XUFfX
Looking forward, Vembu cautioned that the industry is facing a significant shift.
“We are only in the early stages of a long reckoning. My thesis is that the last 30 years are not a good guide post to the next 30 years. We are truly at an inflection point,” Vembu added.
“We have to challenge our assumptions and do fresh thinking,” he noted.
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