Zoho Corporation Co-founder and Chief Scientist Sridhar Vembu has raised concerns over slowing job creation in India’s information technology sector, saying increasing investments in artificial intelligence (AI) and data centre infrastructure are diverting funds that would otherwise have gone towards hiring new employees.
In a post on social media platform X, Vembu said the country’s biggest challenge is creating jobs for its large youth population amid an increasingly uncertain global economic environment.
Hiring slows despite business continuity
Vembu said the IT industry, including Zoho, has not generated significant new employment in recent years.
“We have not laid off people but we are not creating new jobs either,” he said, adding that funds that would have been used to recruit employees are now being spent on AI and rising data centre costs.
He attributed part of the cost pressure to the steep increase in server and memory prices, noting that while companies are trying to control expenses, many of these costs remain beyond their control.
AI changing software economics
According to Vembu, AI has improved software development productivity by enabling companies to build software faster. However, he questioned whether the already saturated global software market requires substantially more software.
He argued that software is increasingly behaving like a commodity industry, where competitive differentiation depends more on quality, reliability and brand strength than on volume, resulting in slower growth prospects.
Vembu also noted that enterprise customers are redirecting a larger share of their technology budgets towards AI initiatives.
Questions over AI investments
The Zoho co-founder also expressed caution about the economics of the fast-growing AI industry.
He observed that many AI companies are investing heavily in capital expenditure, funded through significant borrowing, but said it remains uncertain whether they can generate the profits needed to justify those investments.
Manufacturing may not bridge the gap
Vembu said large-scale manufacturing may not be able to absorb the employment shortfall because increasing automation is reducing the number of jobs created even as production expands.
While automation makes goods more affordable by lowering production costs, he said the bigger challenge is ensuring people have sufficient income to buy those products.
Debate on future employment
Vembu said some believe Universal Basic Income (UBI) offers a solution to the employment challenge, adding that India already has welfare programmes that resemble such support.
He suggested political pressure for broader income support could intensify in the future but questioned whether there could be a better long-term solution to address employment generation