Zoho’s Sridhar Vembu flags inefficiency in India’s IT sector amid Trump tariffs woes: ‘There was trouble ahead…’

Cloud-based software services major Zoho Corporation's co-founder, Sridhar Vembu, on Friday, April 18, flagged that India's IT sector and the software industry are facing inefficiency issues amid the Trump tariffs, according to a post on the platform X.

“The broader software industry has been quite inefficient, both in products and services,” said Vembu in his social media post on X, responding to a social media post. 

A social media user highlighted how Q4 results from India's IT sector, which includes TCS, Wipro, and Infosys, show a “total washout.” Vembu responded that this phase in the Indian IT industry is not just an effect of the Trump tariff uncertainties, a cyclical downturn, or artificial intelligence (AI) related.

“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,” said Vembu in his post.

IT Sector ‘Inefficiency’

Zoho's Sridhar Vembu focused on the ‘inefficiencies’ in the Indian IT sector, which have accumulated over the years and formed into an alleged asset bubble. He also focused on how Indians must adapt to these ‘inefficiencies’ as their jobs depend on them. 

“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. The IT industry sucked in talent that may have gone into manufacturing or infrastructure,” said Vembu in his post on X.

Vembu also warns that Indians have to challenge their ‘assumptions’ and do some fresh thinking which is likely to guide them through this phase of an “inflection point” for the nation's software and IT industry.

“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,” said Vembu.

“We have to challenge our assumptions and do fresh thinking,” he said.

The Zoho co-founder's concerns also come at a time when the IT sector is already facing the effects of US President Donald Trump's imposed tariffs, fears looming over global clients. The overall demand for IT services has gone down since the escalation of the trade war between the US and other world nations.

Apart from the tariff fears, other factors like artificial intelligence and automation are also threatening the business of IT firms globally. The news agency PTI reported, citing analysts, that AI-powered software could make development vastly more efficient.

This would reduce the need for bigger teams and may or may not lead to potential layoffs. In nations like India, IT services exports are a big part of India's economy.