{"slug": "it-sectors-budget-for-hiring-new-employees-is-now-going-towards-ai-spending-zoho", "title": "IT Sector’s Budget For Hiring New Employees Is Now Going Towards AI Spending: Zoho Founder Sridhar Vembu", "summary": "Zoho founder Sridhar Vembu said the IT industry, including Zoho, has largely stopped creating new jobs, with funds that would have gone to hiring now consumed by AI and data center costs due to rising server and memory prices. Vembu noted Zoho has not laid off anyone but is not adding new roles, and he highlighted that the global market for software is saturated, with enterprise customers redirecting IT budgets toward AI spending.", "body_md": "AI might not yet be replacing employees at scale in Indian IT, but it could be impacting new hiring in a big way.\n\nZoho founder Sridhar Vembu has said that his company, along with the rest of the IT industry, has largely stopped creating new jobs, and the money that would have gone into hiring is now being consumed by AI and data centre costs instead. In a detailed post, Vembu laid out what he called the real issue facing the country: how to create jobs for India’s massive young population in an increasingly uncertain global economy.\n\n“Sadly, the IT industry, including Zoho, have not created many jobs in recent years,” Vembu wrote. He was careful to note that Zoho hasn’t laid off anyone, but said the company simply isn’t adding new roles either. “The money that would have gone to new employees is now going to AI and data center costs, the latter due to the steep rise in server and memory prices,” he said, adding that Zoho is trying to control these costs but that a lot of it is [out of the company’s control](https://officechai.com/ai/ai-is-clearly-an-investment-bubble-zoho-founder-sridhar-vembu/).\n\nThe memory and server price point is worth dwelling on. AI companies across the world are buying up chips, servers and storage at a pace that has pushed component prices up sharply, and that inflation is now showing up in the cost sheets of companies that aren’t even building frontier AI models themselves. Zoho, which runs its own data centres rather than depending entirely on public cloud providers, is directly exposed to this.\n\nVembu’s post also gets at a question that’s been circling the software industry for a while now: does the world actually need much more software than it already has? He argued that AI lets companies like his produce software faster, but the global market for it is already saturated. “Like any commodity industry, the focus shifts to quality, reliability, brand and so on and growth will be much slower,” he said. Enterprise customers, both large and mid-sized, have also been redirecting their own IT budgets towards AI spending rather than fresh software purchases, which squeezes vendors like Zoho from the demand side as well.\n\nThis lines up with what other tech leaders have been saying about the sector. Perplexity CEO Aravind Srinivas had earlier predicted that [Indian IT companies will hire fewer people](https://officechai.com/ai/indian-it-companies-will-hire-fewer-people-in-the-ai-era-perplexity-ceo-aravind-srinivas/) as AI takes over more of the coding work that used to require large outsourced teams. Vinod Khosla has gone further, saying that IT services as a business will [mostly disappear](https://officechai.com/ai/software-it-services-will-mostly-disappear-in-current-form-because-of-ai-vinod-khosla/) in its current form. TCS has already begun trimming its workforce, citing the changing nature of work under AI. Vembu himself is no stranger to flagging AI’s economic distortions, having called the current wave of AI investment [an outright bubble](https://officechai.com/ai/ai-is-clearly-an-investment-bubble-zoho-founder-sridhar-vembu/) even while taking the underlying technology seriously.\n\nVembu also pointed out that even the AI companies growing the fastest are borrowing and spending enormous sums on capital expenditure, without it being clear they’ll ever generate the profits needed to justify that spending. It’s a concern that has been raised repeatedly by investors and analysts watching the scale of capex being poured into AI infrastructure globally, largely funded by debt rather than existing cash flows.\n\nThe founder then widened the lens beyond IT. If software isn’t going to absorb India’s young workforce, and manufacturing is increasingly automated and produces comparatively few jobs even at large scale, then what sector picks up the slack? Vembu called this a genuinely open question, though not one that troubles him on the production side. As an economic thinker, he sees automation driving down the cost of goods, including advanced tech products, as ultimately a good thing. Cheaper production means cheaper goods for everyone.\n\nThe harder problem, in his telling, is how the economy gets structured so that people actually have the income to afford those cheap goods. He called this the “only” question, one that’s simple in theory but far from easy in practice.\n\nOn this, Vembu brought up Universal Basic Income, noting that some version of it is already playing out in India through state welfare schemes that are often dismissed as “freebies.” He expects political pressure to push this further in the years ahead. It’s a debate that’s been gaining traction globally as AI reshapes labour markets — even Elon Musk has spoken about AI eventually pushing economies not just toward [universal basic income but universal high income](https://officechai.com/ai/ai-wont-just-lead-to-universal-basic-income-but-universal-high-income-elon-musk/), where abundance from automation is distributed widely rather than merely enough to cover basic needs.\n\nVembu’s comments carry particular weight given Zoho’s own hiring philosophy over the years. The company has built its identity around creating jobs in rural India, opening offices in small towns and famously running much of its operations out of Tenkasi in Tamil Nadu, where Vembu himself lives. He’s also been openly critical of companies that lay off staff for reasons he sees as opportunistic rather than necessary, once calling Freshworks’ job cuts [“naked greed”](https://officechai.com/startups/zoho-ceo-sridhar-vembu-lambasts-freshworks-layoffs-calls-them-naked-greed/) when the company was still profitable and growing at the time. That a founder this committed to employment generation is now saying hiring has stalled says something about how deep the shift caused by AI spending really is.\n\nFor India’s IT sector, which has for decades been one of the country’s largest employers of educated youth, the implications are significant. If the biggest and most disciplined players in the industry are directing their budgets toward AI infrastructure instead of headcount, the traditional path of IT services absorbing millions of new graduates every year looks a lot less certain than it once did.", "url": "https://wpnews.pro/news/it-sectors-budget-for-hiring-new-employees-is-now-going-towards-ai-spending-zoho", "canonical_source": "https://officechai.com/stories/it-sectors-budget-for-hiring-new-employees-is-now-going-towards-ai-spending-zoho-founder-sridhar-vembu/", "published_at": "2026-08-02 04:18:31+00:00", "updated_at": "2026-08-02 04:38:54.050054+00:00", "lang": "en", "topics": ["artificial-intelligence", "ai-policy", "ai-ethics"], "entities": ["Zoho", "Sridhar Vembu", "Perplexity", "Aravind Srinivas", "Vinod Khosla", "TCS"], "alternates": {"html": "https://wpnews.pro/news/it-sectors-budget-for-hiring-new-employees-is-now-going-towards-ai-spending-zoho", "markdown": "https://wpnews.pro/news/it-sectors-budget-for-hiring-new-employees-is-now-going-towards-ai-spending-zoho.md", "text": "https://wpnews.pro/news/it-sectors-budget-for-hiring-new-employees-is-now-going-towards-ai-spending-zoho.txt", "jsonld": "https://wpnews.pro/news/it-sectors-budget-for-hiring-new-employees-is-now-going-towards-ai-spending-zoho.jsonld"}}