IT industry isn't creating enough jobs anymore: Zoho's Sridhar Vembu explains why 

Zoho founder and Chief Scientist Sridhar Vembu on Sunday said India's biggest economic challenge is creating enough jobs for its large young population. He warned that the IT industry, including Zoho, has not generated significant new employment in recent years as companies diverted spending toward artificial intelligence and data centres.

"The real issue facing our nation is how to create jobs for our massive cohort of youth in this very uncertain global landscape," Vembu said in a post on X. "Sadly, the IT industry, including Zoho, has not created many jobs in recent years. We have not laid off people, but we are not creating new jobs either," he said.

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AI SPENDING REPLACING HIRING

According to Vembu, money that would previously have been spent on hiring new employees is now being redirected towards AI infrastructure.

"The money that would have gone to new employees is now going to AI and data center costs, the latter due to the steep rise in server and memory prices," he said, adding that while Zoho is trying to control those expenses, "a lot of that is out of our control."

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SOFTWARE MARKET IS MATURING

Vembu said AI has made software development faster, but questioned whether the global market needs significantly more software.

"While AI allows us to produce more software quicker, does the over-saturated global software market need a lot more software?" he asked.

He argued that software is increasingly behaving like a commodity industry, where growth slows as competition shifts toward "quality, reliability, brand and so on."

Vembu also noted that large and mid-sized enterprise customers are reallocating their IT budgets toward AI. At the same time, he said even fast-growing AI companies are borrowing heavily to fund capital expenditure, making it uncertain whether they will generate the profits needed to justify those investments.

WHERE WILL THE JOBS COME FROM?

Vembu questioned which sectors could absorb workers if IT hiring slows, arguing that automation has also reduced employment opportunities in manufacturing. "What other industry can pick up the slack? Extensive automation means that large-scale manufacturing produces few jobs," he said.

While describing automation as economically beneficial because it makes goods cheaper to produce, Vembu said it raises a more fundamental question about how people will earn enough to buy those increasingly affordable products.

Vembu said some believe Universal Basic Income (UBI) is the answer, adding that elements of such support already exist in India in the form of what "we call them freebies."

"We can expect the political pressure to do a lot more," he said, before ending with the question: "Is there a better answer?"