Prime Highlights
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Zoho CEO Sridhar Vembu attributes India’s IT sector downturn to internal inefficiencies and not external factors like AI or trade tariffs.
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He urges the industry to reexamine its basic assumptions and prepare for long-term structural changes.
Key Facts
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Infosys, TCS, and Wipro posted disappointing quarterly results, sparking sector-wide stagnation concerns.
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Vembu rejects AI disruption or U.S. trade policy blame as mere distractions from deeper issues.
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He cautions that the industry is only just beginning a critical transformational phase.
Key Background
Zoho Corporation CEO Sridhar Vembu contributed to the analysis of the existing churn in the IT services space in India following lackluster quarterly numbers at sector giants Infosys, Tata Consultancy Services (TCS), and Wipro. Based on a philosophical critique, Vembu cautioned that the slow-down is anything but a one-quarter or cycle-specific blip—it’s symptomatic of recurring inefficiencies eventually catching up on the industry.
In response via an X (formerly Twitter) post, Vembu dismissed the traditional explanation that recent troubles are largely attributable to outside factors such as U.S. tariffs or the rapid adoption of artificial intelligence (AI). “What we are seeing is not a cyclical downturn, and it is not AI-led,” he stated. He emphasized that even in the absence of global trade troubles, precursors of distress already cast their shadow on the IT industry.
Vembu argued that the broader software industry—covering services and product development—has increasingly become less productive over time. He blamed this on a long asset bubble, where the industry grew steadily without addressing underlying inefficiencies. In India, inefficiencies sank deep roots, as the IT industry absorbed much of the country’s skilled manpower—manpower that could have otherwise strengthened manufacturing, infrastructure, or other key sectors.
Pointing to the gravity of the moment, Vembu stated, “We are in just the beginning phases of a long reckoning.” He urged business leaders to question their underlying assumptions, cautioning that business models and operating playbooks of the past three decades may no longer be valid.
It is a turning point,” he said. In order to put the sector on track and align it with global changes, Vembu believes new thinking and a willingness to question outdated norms are critical. He emphasized that only through internal change and a re-examination of structural deficiencies can the Indian IT industry sail past challenges and remain competitive in the years ahead.
