Sridhar Vembu, Chief Scientist at Zoho Corporation, has issued a grim assessment on the current health of India's Information Technology (IT) sector.
Vembu, known for his candid social media posts, recently responded to the disappointing quarterly results of big IT businesses such as TCS (Tata Consultancy Services), Infosys, and Wipro, stating that the slowdown is neither cyclical nor primarily caused by AI (Artificial Intelligence) and Trump tariffs, Economic Times reports.
According to him, the industry is on the verge of a profound and long-lasting transformation.
Vembu says the broader software business has been inefficient for decades, aided by an ongoing asset bubble. These inefficiencies, which arise from overstaffing, bloated systems, and an input-driven billing model, have long been accepted, particularly in India.
"Our jobs came to depend on them," he said, noting that many Indian IT jobs were established on inefficiencies brought from the West.
Vembu underlined that Indian IT services companies exacerbated these inefficiencies by recruiting in large numbers due to fixed dollar budgets and cheap per capita costs.
This technique not only squandered potential, but also perpetuated inefficient processes.
"A two-person team can outperform a 20-person team," he emphasised, criticising how staff-month billing removed the motivation to innovate or streamline.
AI, he feels, is not currently the primary threat. While it now provides moderate productivity improvements (10-20 per cent), years of accumulated inefficiencies are increasingly threatening the software job market.
Vembu noted how past reckonings, such as the 2008 financial catastrophe, were avoided through monetary easing. However, with today's financing "drought," he claims that the day of reckoning can no longer be postponed.
