IT Sector Slowdown: AI, Trump Tariffs Not Solely To Blame, Says Sridhar Vembu's 'Operating Thesis'

The slowdown seen in the headline numbers being reportered by India's information technology companies is not just a result of disruption due to artificial intelligence and the Trump tariffs but also inefficiency in products and services of the broader software industry, according to Zoho founder Sridhar Vembu.

"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. The broader software industry has been quite inefficient, both in products and services," the billionaire said in a post on social media platform X.

He observed that inefficiencies have accumulated over decades of a prolonged asset bubble and those were adapted in India.

Indian IT majors Tata Consultancy Services Ltd., Infosys Ltd. and Wipro Ltd. reported their fourth quarter and full year financial results this week and gave a weak outlook, sparking disappointment on the street. The IT honchos have been under the tariff cloud which has delayed new orders and project ramp-ups.

A fallout has been a freeze in hiring in a sector that has long provided a gateway for lakhs of young graduates to eager to enter the workforce every year.

"Our jobs came to depend on them. The IT industry sucked in talent that may have gone into manufacturing or infrastructure (for example). We are only in the early stages of a long reckoning," Sridhar Vembu said.

The Zoho Chief Scientist has warned that the country is at an "inflection point" and the last 30 years are not a good guide post to the next 30. "We have to challenge our assumptions and do fresh thinking."