AI costs and data centres are slowing IT hiring, says Zoho founder Sridhar Vembu

New Delhi: Artificial intelligence may be writing more code, but it is also rewriting hiring plans. Zoho founder and chief scientist Sridhar Vembu has said the IT industry is creating far fewer jobs as companies divert spending towards AI and data centre infrastructure instead of expanding their workforce.

In a post on social media platform X, Vembu said the challenge of generating employment for India’s large youth population has become more pressing amid an uncertain global economic environment. He noted that while companies, including Zoho, have largely avoided layoffs, they have also not added significant numbers of new employees in recent years.

According to Vembu, funds that would previously have been allocated towards hiring are now being channelled into AI investments and higher data centre costs, driven in part by steep increases in server and memory prices. He said many of these cost pressures remain beyond the control of software companies despite efforts to manage expenses.

Vembu also questioned whether the global software industry requires substantially more software, even though AI has made software development faster and more efficient. He argued that the market has become increasingly saturated, shifting competition towards quality, reliability and brand value rather than rapid expansion, resulting in slower growth prospects.

He further observed that enterprise customers are also reallocating their technology budgets towards AI initiatives. At the same time, he raised concerns over whether AI companies investing heavily in capital expenditure will ultimately generate the profits needed to justify those investments.

Beyond the technology sector, Vembu expressed doubts that manufacturing can absorb surplus labour, pointing out that automation has significantly reduced the number of jobs created even in large-scale industrial production.

He added that while automation and technological advances make goods more affordable by lowering production costs, they also raise a broader economic challenge of ensuring that people have sufficient incomes to purchase those goods. Vembu noted that proposals such as Universal Basic Income are increasingly being discussed globally, adding that similar forms of income support already exist in India through welfare programmes and that political pressure for such measures could intensify.

Vembu’s remarks highlight a growing debate over whether the rapid adoption of AI will reshape not only the economics of the technology industry but also the future of employment, investment and income distribution in India.