‘There was trouble ahead…’: Sridhar Vembu slams decades of inefficiency in Indian IT, says real value was never built
As the global tech landscape shifts toward automation, AI integration, and cost-effective cloud solutions, Indian IT firms are struggling to keep pace. The traditional outsourcing model that once propelled the industry now appears increasingly outdated. Clients demand more than cheap labour — they want agility, innovation, and end-to-end digital transformation. Combined with shrinking deal sizes, delayed decision-making, and geopolitical pressures, the sector is navigating some of its most turbulent times yet.
Amid this storm, Zoho Corporation’s Chief Scientist Sridhar Vembu has offered a stark reality check. In a post on X (formerly Twitter), Vembu called out decades of inefficiencies in the software sector, propped up by an extended asset bubble and normalized by the Indian IT ecosystem.
“My operating thesis: what we are seeing is not just a cyclical downturn and it is not just AI related. Even without the uncertainty induced by tariffs, there was trouble ahead,” he wrote.
He criticised the industry’s reliance on bloated systems, over-hiring, and input-based billing, stating, “The broader software industry has been quite inefficient both in products and services. These inefficiencies have accumulated over decades of a prolonged asset bubble. Sadly, we adapted to a lot of those inefficiencies in India. Our jobs came to depend on them.”
Vembu also lamented the redirection of skilled talent away from foundational sectors. “The IT industry sucked in talent that may have gone into manufacturing or infrastructure (for example),” he said.
Calling for a reset, he added, “We are only in the early stages of a long reckoning. My thesis is that the last 30 years are not a good guide post to the next 30 years. We are truly at an inflection point. We have to challenge our assumptions and do fresh thinking.”
The post sparked immediate reactions online. One user wrote, “And we sacrificed and burnt generations of talent in the process to serve as a backdoor office to the global giants at the cost of India’s autonomy and leadership. Jugaad is inefficiency, not a path to cutting-edge innovation and digital sovereignty.”
Vembu responded: “I am sorry to have to agree with this. We have to deploy talent to solve our own problems.”
Others echoed similar sentiments. One comment read, “These technology companies in India that became mega companies due to outsourcing, never had a sustainable model in the first place. They didn’t build products. They didn’t spend money and time in research and development… it was good while it lasted – many people created generational wealth.”
Another added, “A lot of IT + Tech jobs in India came from export of cheap US money in return for services. Those jobs produced little real value… a shakeout is coming.”
