Zohos Sridhar Vembu says AI is slowing IT hiring, warns of job challenge for Indias youth

New DelhiAug 2, 2026 04:54 PM IST Sridhar Vembu said funds that would previously have been used to recruit employees are increasingly being spent on AI-related infrastructureZoho founder Sridhar Vembu said India’s biggest economic challenge is creating enough jobs for its young population. In an X post, he also highlighted that the information technology (IT) sector has slowed hiring as companies divert spending towards artificial intelligence (AI) infrastructure and data centres. Vembu said the IT industry, including Zoho, has not generated significant new employment in recent years despite avoiding large-scale layoffs.“The real issue facing our nation is how to create jobs for our massive cohort of youth in this very uncertain global landscape. Sadly, the IT industry, including Zoho, has not created many jobs in recent years. We have not laid off people, but we are not creating new jobs either,” he wrote. Sridhar Vembu on funds for AI-related infrastructure Vembu added that funds that would previously have been used to recruit employees are increasingly being spent on AI-related infrastructure. “The money that would have gone to new employees is now going to AI and data center costs, the latter due to the steep rise in server and memory prices,” he said, adding that while Zoho is working to keep such costs under control, many of the underlying factors remain beyond the company’s control. Further, he said AI has significantly improved software development productivity but questioned whether the global market requires substantially more software. “While AI allows us to produce more software quicker, does the over-saturated global software market need a lot more software?” he asked. He argued that software is increasingly becoming a commodity, with competition shifting from rapid expansion to factors such as quality, reliability and brand value.Story continues below this ad Vembu also said large and mid-sized enterprises are reallocating their technology budgets towards AI investments. At the same time, he noted that many fast-growing AI companies are relying heavily on borrowed capital to fund infrastructure, raising questions about whether future profits will justify those investments. Expressing concern over employment prospects beyond the IT sector, Vembu said automation has reduced labour demand in manufacturing as well. “What other industry can pick up the slack? Extensive automation means that large-scale manufacturing produces few jobs,” he said. Concerns about worker’s income generation While acknowledging that automation improves economic efficiency by reducing production costs, Vembu said it also raises broader concerns about workers’ income generation. “As an economic thinker, this is a good thing: ultimately all kinds of goods, including advanced tech products, become very affordable because production becomes so cheap. The “only” question is how the economy is structured so people have the income to afford those affordable goods,” he wrote. The real issue facing our nation is how to create jobs for our massive cohort of youth in this very uncertain global landscape. Sadly, the IT industry, including Zoho, have not created many jobs in recent years. We have not laid off people but we are not creating new jobs… — Sridhar Vembu (@svembu) August 2, 2026 The post quickly gained momentum, prompting a wave of reactions. “Socialism, workers controlling the means of production is the answer. Under capitalism, advances in productice capacity becomes a bad thing. How pathetic!” a user wrote. “We have seen the collapse of economics of Shri Lanka and Pakistan which was the direct result of too much freebies,” another user commented.Story continues below this ad “You see any small product from super market most of them are made in china . Why can’t we make things in india . We need to build that expertise using ai,” a third user reacted.