Sridhar Vembu, Zoho's Chief Scientist and Founder, believes that the current issues in the software employment market are the result of a larger systemic issue rather than artificial intelligence displacing jobs (at least not yet).
In a lengthy article on X (formerly known as Twitter), Vembu, who has been in the software industry for 30 years, stated that during the last few decades, enterprise software has accrued huge inefficiencies as a result of an infusion of venture capital, private equity, and IPO (Initial Public Offering)-driven funding, Economic Times reports.
This overcapitalisation resulted in an artificial expansion of the software business, creating a market bloated with duplicated Information Technology (IT) systems, unnecessary hiring, and misguided incentives, he claimed.
According to Vembu, one of the primary drivers of this inefficiency has been aggressive marketing by software vendors.
Companies have long relied on tactics that instill fear, uncertainty, and doubt (FUD) in corporate customers, causing enterprises to increase their IT spending without necessarily improving efficiency, he wrote.
"Software vendors applied liberal doses of marketing spending to spread Fear (of missing out) and Uncertainty ("tech is changing, you need us") and Doubt ("are you confused? trust us") among corporate customers and the result was ever growing IT spending," he said.
Large firms, particularly in the West, he claimed, slipped into a loop of constantly obtaining new software solutions, only to spend much more money integrating and managing these complicated systems. Rather than streamlining processes, these bloated IT infrastructures became permanent resource drains, requiring enormous human resources merely to keep them operational.
Vembu noted that a significant amount of these inefficiencies were then outsourced to Indian IT services providers. Western firms, in order to keep their IT spending in dollars, moved much of their workload offshore, effectively increasing inefficiencies and making the Indian software sector reliant on them.
Interestingly, the Zoho founder claims that Indian banks and financial institutions have achieved substantially greater IT efficiency with significantly lesser budgets than their Western counterparts.
Vembu identified another fundamental issue with the present software industry: a lack of incentives to optimise efficiency.
According to him, there is little motivation in IT services to reduce team sizes or improve procedures because payment is frequently based on staff hours rather than outcomes.
However, corporations have continued to increase headcounts, not out of necessity, but because the industry's structure encourages inefficiency, he added.
Vembu expressed pessimism about the future of software jobs since the industry's inherent inefficiencies are being exposed, and there is no financial cushion to disguise them.
While AI may someday replace certain jobs, he believes the most pressing issue is the collapse of an unsustainable economic model that has long prioritised manpower over actual efficiency.
