Zoho's Vembu Sounds Alarm: AI Spending Is Eating India's IT Job Growth

Zoho co-founder Sridhar Vembu has opened up about a trend quietly reshaping India's technology sector — companies, including his own, have largely stopped adding new jobs as budgets shift toward artificial intelligence.

Speaking on X, Vembu framed this as a national concern rather than just a corporate one. "The real issue facing our nation is how to create jobs for our massive cohort of youth in this very uncertain global landscape," he wrote.

Notably, Vembu clarified that Zoho hasn't resorted to layoffs, unlike several peers in the industry. Still, he admitted job creation has stalled. "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.

His remarks land at a tense moment for India's tech workforce. Major players like Infosys, Oracle, Microsoft, and Meta have all trimmed headcount over the past year. Data from Xpheno's Active Tech Jobs Outlook for August 2026 shows active job openings in IT falling 6 percent year-on-year to around 44,000, even as broader tech-sector openings rose to 1,09,000 roles.

According to Vembu, the money once earmarked for hiring is now flowing into AI infrastructure. "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. We are trying to control those costs but a lot of that is out of our control," he explained. Tech giants like Google, Meta, and Microsoft are reportedly setting aside hundreds of billions this year for AI alone, while Indian firms such as HCL Tech and TCS expand their own data center footprints.

Vembu also questioned whether the software industry truly needs more output at this scale, suggesting it's beginning to resemble a commodity business driven by "quality, reliability, brand and so on." He was equally doubtful that manufacturing or other automated sectors could absorb displaced workers, noting that heavy automation "produces few jobs."

Looking further ahead, Vembu described the possibility of a more efficient, low-cost economy — provided society finds a way to distribute its benefits. He referenced Universal Basic Income as one possible answer, pointing to India's existing welfare schemes as an early version of the concept, and predicted growing political pressure for more such measures.