Zoho’s Sridhar Vembu criticizes software sector as layoffs surge in Indian IT

Responding to recent setbacks at Infosys, Wipro, and TCS, Sridhar Vembu described the ongoing layoffs and financial slowdown as a broader industry reckoning, stressing it stems from decades of inefficiency—not just AI or economic cycles

Zoho Corporation co-founder Sridhar Vembu has delivered a sharp critique of the software industry amid mounting layoffs at major Indian IT companies, attributing the crisis to long-standing inefficiencies rather than short-term market disruptions.

Speaking in response to recent developments at Infosys, Wipro, and Tata Consultancy Services (TCS), Vembu described the current wave of job cuts and financial slowdowns as part of a broader reckoning. “This is not just a cyclical downturn or an AI-related shift. The industry has been inefficient for decades,” he said.

According to Vembu, the software sector has operated within the confines of an “asset bubble,” which has led to inflated valuations, bloated workforces, and minimal productivity gains. He criticized India’s IT ecosystem for adopting these global inefficiencies instead of forging a more resilient, innovation-driven path. “Unfortunately, we copied the wrong aspects of this model,” he noted.

Sluggish growth hits IT giants

His remarks come at a time when top-tier IT firms are reporting their weakest performances in years. Infosys recently cut its revenue growth forecast for FY26 to 0–3%, the lowest since the 2008 global financial crisis. It also plans to lay off 240 entry-level employees who failed internal assessments, adding to over 300 trainees let go earlier this year. Although reskilling programs were offered through NIIT and UpGrad, the layoffs signal tightening margins and performance pressure.

Wipro, despite posting a 25.9% jump in net profit to ₹3,569.6 crore, has issued weak guidance for the upcoming quarter, forecasting a revenue decline of up to 3.5%. Its shares dropped 6% following the announcement. Meanwhile, TCS reported a Q4 profit dip of 1.69% year-on-year and its slowest revenue growth in four years.

Call for industry course correction

Vembu warned that the situation may worsen unless the industry course-corrects. “We are at an inflection point,” he said. “The last 30 years will not be a blueprint for the next 30. We must rethink everything—from education and hiring to value creation and where our talent is going.”

He also advocated for channeling tech talent into underinvested sectors like manufacturing, energy, and infrastructure. “Software is important, but it cannot be the only path. It’s time to build across sectors.”

His comments echo growing calls for structural reform in India's tech economy, as the country navigates a challenging period for its flagship industry.