Zoho Corporation Founder and Chief Scientist Sridhar Vembu flagged the "real issue" that the Indian IT sector is facing: Lack of Job creation. Vembu pointed out that the IT sector is diverting its funds into artificial intelligence and data centre infrastructure.
Notably, he admitted that Zoho has been grappling with the same dilemma and said while the company has not laid off anyone, it has also not been able to create many jobs in recent years.
"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 either," Vembu wrote in a post on social media platform X on Sunday.
He added that the money that would have gone to new employees is now going to AI and data center costs due to steep rise in server and memory prices, and while they try to control steep rise in server and memory prices, much of it lies outside of their capacity.
The real issue facing our nation is how to create jobs for our massive cohort of youth in this very uncertain global landscape.
— Sridhar Vembu (@svembu) August 2, 2026
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…
"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. We are trying to control those costs but a lot of that is out of our control," the Zoho Corp. founder highlighted.
Dissecting the dilemma he asked, while AI allows for greater and faster software production, "does the over-saturated global software market need a lot more software?"
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.
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