Zoho CEO Sridhar Vembu (image:x.com/ChanakyaUni)
Founder and Chief Scientist of Zoho Corporation Sridhar Vembu recently shared his insights on the challenges facing the software job market. In a social media post on Tuesday (March 11), he communicated six factors contributing dwindling the software job market, citing that artificial intelligence (AI) is not the primary reason behind the job losses in the industry.
Vembu observes that the software industry saw a massive over-expansion over the years, due to the flood of venture capital (VCs), private equity (PE) investors and Indian Stock Market (IPO) money.
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He states that this flow of capital resulted in extensive marketing campaigns by software vendors, which spread a climate of fear, uncertainty, and doubt among corporate customers. “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 connects it with the Western countries and how they have “layers and layers of duplicated IT systems” for which they spend a lot of money to make them work together.” This move impacts the the cost of operations, resulting large corporations with “inefficient” IT systems ended up becoming a permanent resource, requiring to spend more human resources and money, he adds.
What is ailing the software job market is not AI taking away jobs (not yet anyway).
Here is my thesis, as a participant and observer of software for 30 years. Over those 30 years:
1. Massive over-capacity steadily developed in enterprise software due to a flood of VC, PE and…
— Sridhar Vembu (@svembu) March 11, 2025
He connects it with the Western countries and how they have “layers and layers of duplicated IT systems” for which they spend a lot of money to make them work together.” This move results impacts the the cost of operations, resulting large corporations with “inefficient” IT systems ended up becoming a permanent resource, requiring to spend more human resources and money.
According to Vembu, IT companies in the West solved this “inefficiency” problem by outsourcing the work to India. But this lead to a “multiplied inefficiency”, he points out. “That “multiplied inefficiency” happened because IT budgets were kept fixed in dollar terms and more people got hired in India to ‘get more done’,” he said in the post.
As a result, Vembu added that the large number of IT jobs in India became dependent on those “original inefficiencies and the multiplied inefficiencies”.
Vembu observes that banks and financial institutions in India spend far less than those in the United States. This budget constraint, made them to be much more efficient than their Western counterparts. “Indian firms did not have the budgets to splurge! Necessity made them highly efficient and today India’s financial institutions are able to fend off foreign competition easily,” he wrote.
Highlighting the efficiency factor, the Zoho co-founder claims that a two-person team can “solidly outperform” a team with 20 people because of efficiency and talent. “This is not just due to talent disparity – even when the large teams have equivalent talented people, they can easily end up being wasted on unproductive projects,” he added.
He then mentioned about “zero incentive” to remove inefficiencies, stating that people are billing by the hour they work or by the staff month (input metrics), has multiplied inefficiencies.
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About the potential of AI and its takeover, Vembu said: “A large amount of code is boilerplate code in many projects and AI can eat such code for breakfast. Depending on the nature of a project AI can offer 10-20% productivity gains. Significant but not the 10x or 100x leap yet to destroy jobs on a vast scale.”
He then added that AI gains of today pale in comparison to the “multiplied inefficiencies” built up over decades. Vembu, thus, underlines that the struggles of software job market traces back to history than from the immediate impact of AI.
