Zoho Corporation Founder and Chief Scientist Sridhar Vembu on Sunday said the information technology (IT) industry is not creating many new jobs as funds are being diverted to meet the rising costs of artificial intelligence (AI) and data centre infrastructure.In a post on social media platform X, Vembu noted that while the IT industry, including Zoho, has avoided large-scale layoffs, it has failed to generate significant new employment opportunities in recent years.
“The money that would have gone to new employees is now going to AI and data centre costs, the latter due to the steep rise in server and memory prices,” Vembu said. He added that while the company is attempting to manage these expenses, many factors remain beyond their control.
Vembu questioned the need for increased software production in the current environment. “While AI allows us to produce more software quicker, does the over-saturated global software market need a lot more software?” he asked.
He noted that like any commodity industry, the focus is shifting to quality, reliability, and brand, which will lead to “much slower” growth. The Zoho founder also pointed out that enterprise customers are redirecting their own IT spending towards AI. He expressed uncertainty regarding the financial returns for AI companies that are currently borrowing and spending heavily on capital expenditure (capex). “It is not clear they will achieve the massive profits they need to justify all the capex,” Vembu remarked.
On the broader issue of employment, he expressed doubt that manufacturing could “pick up the slack,” noting that extensive automation translates to large-scale manufacturing producing few jobs. Vembu observed that while advanced technology makes goods more affordable by lowering production costs, it creates a structural challenge for the economy regarding income distribution.
“The ‘only’ question is how the economy is structured so people have the income to afford those affordable goods,” he said, adding that while the question is simple in theory, it is difficult in practice. He further noted that some view Universal Basic Income (UBI) as a solution, pointing out that elements of this are already visible in India in the form of “freebies.” He suggested that political pressure to expand such measures is likely to increase as the challenge of employing the nation’s youth persists in an uncertain global landscape.
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