Zoho founder Sridhar Vembu has said India's biggest economic challenge is creating enough jobs for its young population, warning that the information technology sector has slowed hiring as companies increase spending on artificial intelligence (AI) infrastructure.
In a post on X, Vembu said the IT industry, including Zoho, has not generated significant new employment in recent years despite avoiding large-scale layoffs.
"The real issue facing our nation is how to create jobs for our massive cohort of youth in this very uncertain global landscape. Sadly, the IT industry, including Zoho, has not created many jobs in recent years. We have not laid off people, but we are not creating new jobs either," he wrote.
Vembu said funds that would previously have been used to hire employees are now being directed towards AI and data centre infrastructure.
"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.
While AI has improved software development productivity, Vembu questioned whether the global software market needs significantly more software. He said software is increasingly becoming a commodity, with competition shifting towards quality, reliability and brand value.
He also said many companies are reallocating technology budgets to AI investments, while several fast-growing AI firms are relying heavily on borrowed capital to finance infrastructure.
Expressing concern beyond the IT sector, Vembu said automation has reduced labour demand in manufacturing as well.
"What other industry can pick up the slack? Extensive automation means that large-scale manufacturing produces few jobs," he wrote.
While noting that automation makes goods cheaper by improving production efficiency, Vembu said it also raises broader questions about how people will earn enough to afford those products.