Zoho co-founder and Chief Scientist Sridhar Vembu has warned that India’s biggest economic challenge is not technology itself, but the question of how to create enough jobs for a huge young population in an uncertain global economy. In a detailed post on X, Vembu said the IT industry, including Zoho, is no longer adding jobs at the pace it once did, even if it has avoided large-scale layoffs.

Vembu said the sector’s capital is increasingly being directed away from new employees and toward AI infrastructure and data centres, with rising server and memory prices adding to the pressure. “We are trying to control those costs but a lot of that is out of our control,” he wrote, explaining that hiring is being constrained by structural cost shifts rather than just company policy.

He argued that while Artificial Intelligence is helping software firms produce code faster, the global software market is already saturated and may not need much more software. In his view, the industry is beginning to behave like a commodity market, where growth slows and competition shifts toward quality, reliability and brand rather than large-scale expansion.

AI is rewriting the software industry, but job creation remains the biggest question: Vembu

Vembu also said enterprise customers have redirected a part of their own IT budgets toward AI, which is changing demand patterns across the software sector. He noted that even rapidly growing AI companies are spending heavily on compute and capex, but it remains unclear whether those investments will generate the profits needed to justify the scale of spending.

He framed the issue as a broader economic problem, asking what other industry can absorb the slack if software and large-scale manufacturing create fewer jobs because of automation. “Extensive automation means that large scale manufacturing produces few jobs,” he said, underlining the employment challenge facing India as productivity rises but labour demand weakens.

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From an economic standpoint, Vembu said automation is a positive development because it makes goods and advanced tech products cheaper and more accessible. But, he added, the harder question is how the economy is structured so people still have income to afford those goods.

“That ‘only’ question, simple in theory, is not easy in practice,” he wrote, suggesting that the real challenge lies in income distribution rather than production alone. He said some people see Universal Basic Income as a solution, and pointed out that India already has versions of such support through welfare transfers and “freebies,” with political pressure likely to push for more.

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Vembu warns India’s AI ambitions must be matched by a new employment strategy

Vembu’s remarks add to an ongoing debate about how India should prepare for an AI-driven economy. He has previously argued that automation may not eliminate human purpose, but it will force societies to rethink work, value and income distribution, especially as machines take over more production and software tasks.

The Zoho founder’s latest post is likely to resonate with policymakers and industry leaders because it combines a warning on job creation with a larger question about the future of wages, welfare and growth.

As India races to build out AI, data centres and software capability, Vembu’s message is that the country must also find a way to keep people economically empowered in a world where technology may create more wealth than jobs.