Zoho CEO Sridhar Vembu’s Insight on India’s IT Slowdown: Internal Inefficiencies Over External Factors

In a recent analysis, Zoho CEO Sridhar Vembu shared his perspective on the ongoing slowdown in India’s major IT services sector. While many have pointed fingers at external factors such as US tariffs or the rise of artificial intelligence (AI), Vembu attributes the challenges more to long-standing internal inefficiencies within the industry. According to Vembu, the current state of the IT sector in India is only the beginning of a more significant reckoning that will unfold over the coming years.

The Current IT Slowdown: A Long-Anticipated Reckoning

Sridhar Vembu’s comments come on the heels of disappointing quarterly earnings reports from India’s IT giants, including Infosys, Tata Consultancy Services (TCS), and Wipro. These reports have sparked concerns about slow growth, a potential slowdown in hiring, and a broader decline in the industry’s future prospects. However, Vembu stands firm in his belief that the root causes of these issues are not simply due to external pressures like tariffs or AI.

Instead, he argues that the slowdown is a result of deeper, systemic inefficiencies within the broader software and IT services sectors. According to Vembu, these inefficiencies have built up over decades, and the industry has grown accustomed to operating in an environment that perpetuates them. He points out that many IT companies, particularly in India, have relied heavily on practices that may no longer be sustainable.

Vembu stresses that this is not a temporary downturn. He warns that the industry is at the start of a much larger shift, one that will reshape the landscape of India’s IT services sector in the coming decades. Vembu notes that the assumptions that guided the last 30 years of industry growth are no longer relevant, and new ways of thinking are required to address the challenges ahead.

What Undercode Say: Analyzing the Implications of Vembu’s Assessment

Sridhar Vembu’s critique of India’s IT industry raises several important questions about the future of the sector. In essence, Vembu is highlighting a crucial shift in how the software and IT services industries need to adapt to the changing global landscape. The industry, which has long relied on traditional methods of operation and outsourcing models, is now facing the need for innovation and greater efficiency.

The inefficiencies Vembu points to have been allowed to fester over decades. A combination of outdated practices, over-reliance on low-cost labor, and a focus on short-term gains have stifled long-term growth and innovation within the sector. This is especially evident in how talent is utilized. The IT industry has become a catch-all for skilled professionals who might otherwise have entered fields like manufacturing, engineering, or infrastructure development. This reliance on the IT sector has created a bubble of sorts, where growth has been unsustainable, and future prospects are uncertain.

Furthermore, Vembu’s warning about a “long reckoning” suggests that the repercussions of these inefficiencies will not be immediate. Instead, the sector will experience a gradual but steady decline in productivity and growth unless significant changes are made. The rise of AI and automation, while certainly a disruptive force, is not the primary cause of this slowdown. Rather, it is the failure of Indian IT companies to embrace modern practices, streamline their operations, and adapt to a rapidly changing world.

As Vembu points out, the industry must “challenge assumptions” and rethink its approach to growth and innovation. This is not just about adopting new technologies; it is about fundamentally reworking how the industry operates at its core. To succeed in the next 30 years, India’s IT companies will need to prioritize efficiency, rethink their business models, and invest in talent development that fosters real innovation, rather than just focusing on cost-cutting measures.

The need for a shift in strategy is urgent. While the Indian IT sector has been a driving force for the country’s economic growth over the past few decades, the future is uncertain unless companies are able to adapt to the changing landscape of global business. It is clear that the next phase of growth will require a different kind of thinking—one that is agile, forward-looking, and focused on sustainable, long-term success.

Fact Checker Results

Internal inefficiencies are indeed a significant factor in the Indian IT sector’s challenges, as highlighted by Vembu.
Global factors like tariffs and AI may have contributed, but they are secondary to internal structural issues.
Vembu’s warning of a long-term reckoning aligns with the broader trends in the tech industry, particularly the need for efficiency and innovation.

Prediction: The Future of India’s IT Industry

The Indian IT sector is at a crossroads. While it has dominated the global market for decades, the next phase of growth will require substantial transformation. Companies will need to focus on innovation, efficiency, and talent development, rather than relying on outdated models. The rise of AI and automation will undoubtedly play a role in shaping this new landscape, but it will be the companies that embrace these technologies intelligently and evolve their business practices that will thrive in the future. The next 30 years could look very different from the past, with a more sustainable, resilient IT industry emerging if companies can adapt to the new realities.