Zoho founder Sridhar Vembu links slowing IT hiring to AI and data centre costs

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 VembuVembu 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.The real issue facing our nation is how to create jobs for our massive cohort of youth in this very uncertain global landscape. Sadly, the IT industry, including Zoho, have not created many jobs in recent years. We have not laid off people but we are not creating new jobs…— Sridhar Vembu (@svembu) August 2, 2026 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 saysVembu 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 lossesOn 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 VembuVembu 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.

New Delhi, Zoho Corporation Founder and Chief Scientist Sridhar Vembu on Sunday said the information technology (IT) industry is not creating many new jobs as funds are being diverted to meet the rising costs of artificial intelligence (AI) and data centre infrastructure.In a post on social media platform X, Vembu noted that while the IT industry, including Zoho, has avoided large-scale layoffs, it has failed to generate significant new employment opportunities in recent years."The money that would have gone to new employees is now going to AI and data centre costs, the latter due to the steep rise in server and memory prices," Vembu said.He added that while the company is attempting to manage these expenses, many factors remain beyond their control.Vembu questioned the need for increased software production in the current environment. "While AI allows us to produce more software quicker, does the over-saturated global software market need a lot more software?" he asked.He noted that like any commodity industry, the focus is shifting to quality, reliability, and brand, which will lead to "much slower" growth.The Zoho founder also pointed out that enterprise customers are redirecting their own IT spending towards AI. He expressed uncertainty regarding the financial returns for AI companies that are currently borrowing and spending heavily on capital expenditure (capex)."It is not clear they will achieve the massive profits they need to justify all the capex," Vembu remarked.On the broader issue of employment, he expressed doubt that manufacturing could "pick up the slack," noting that extensive automation translates to large-scale manufacturing producing few jobs.Vembu observed that while advanced technology makes goods more affordable by lowering production costs, it creates a structural challenge for the economy regarding income distribution."The 'only' question is how the economy is structured so people have the income to afford those affordable goods," he said, adding that while the question is simple in theory, it is difficult in practice.He further noted that some view Universal Basic Income (UBI) as a solution, pointing out that elements of this are already visible in India in the form of "freebies." He suggested that political pressure to expand such measures is likely to increase as the challenge of employing the nation's youth persists in an uncertain global landscape.