‘I am pessimistic…’: Zoho’s Sridhar Vembu flags 6 key areas of concern in software job market amid AI threat

Cloud-based software services major Zoho Corporation's co-founder Sridhar Vembu, on Tuesday, March 11, raised concerns about the jobs in the software industry ahead of the upcoming artificial intelligence (AI) revolution. 

In a post on social media platform X, Sridhar Vembu expressed his pessimism about the software job market amid the AI takeover threat, citing reasons such as “massive over-capacity” and the failure to remove people with inefficiencies. 

“That is why I am pessimistic about the software job market, even before accounting for AI,” Sridhar Vembu said in his post. 

Over-capacity concerns

The 57-year-old entrepreneur focused on a few key concerns looming over the software job market after spending nearly 30 years in the industry and formerly being the CEO of Zoho Corp.

Sridhar Vembu highlighted the current situation of a “massive over-capacity” which has steadily developed in the software companies due to an influx of venture capitalists (VCs), private equity (PE) investors and Indian stock market (IPO) money.

Vembu highlighted the flood of money into the IT sector, which was unleashed due to the global pandemic. But those reserves are gone as of now. 

“Those floods are now history and we have a serious drought,” he said.

FOMO concerns

The former CEO also focused on the second aspect, i.e., the rising IT spending over the emotion of not “lagging” behind competitors.

“Software vendors applied liberal doses of marketing spending to spread Fear (of missing out) and Uncertainty ('tech is changing, you need us') and Doubt ('are you confused? trust us') among corporate customers and the result was ever growing IT spending,” said Vembu in his post on X.

Vembu related this with the Western nations and how they have “layers and layers of duplicated IT systems” for which they spend a lot of money to make them work together.

This move contributes to the cost of operations, and these huge “inefficient” IT systems tend to become a permanent resource for which the firms have to spend more human resources and money. 

Transferring Inefficiency to India

According to Vembu's post, IT majors in Western nations have solved their “inefficiency” problem. They started outsourcing or transferring those inefficiencies to IT services firms in India, and by the time they arrived, the inefficiencies would multiply 3 to 4 times.

“That ‘multiplied inefficiency’ happened because IT budgets were kept fixed in dollar terms, and more people got hired in India to ‘get more done’,” said Vembu in his post.

Vembu also stated that as a result of this, the large number of IT jobs in the nation became dependent on those “original inefficiencies and the multiplied inefficiencies”. 

Banks' spending budget

The Zoho co-founder said that banks and financial institutions in India spend far less than those in the United States. This constraint of not having a huge budget to spend made the firms “highly efficient” and equipped to battle foreign competition.

“Indian firms did not have the budgets to splurge! Necessity made them highly efficient and today India's financial institutions are able to fend off foreign competition easily,” Vembu opined.

Efficiency

Sridhar Vembu also addressed the efficiency factor, pointing out that a two-person team can “solidly outperform” a team with 20 people because of efficiency and talent. 

“This is not just due to talent disparity - even when the large teams have equivalent talented people, they can easily end up being wasted on unproductive projects,” Vembu noted. 

Employee billings 

He highlighted the “zero incentive” for heads to remove inefficiencies, underscoring that people are billing by the hour they work or by the staff month (input metrics), which hinders two people from working as efficiently as a team of 20. 

“It is those multiplied inefficiencies in IT, built up over decades, that is facing a reckoning now,” said Vembu. 

On the AI takeover front, Vembu stated that a large amount of code “is boilerplate code in many projects and AI can eat such code for breakfast”. Depending on the nature of a project, AI can offer 10-20 per cent productivity gains, he observed.

“Significant but not the 10x or 100x leap yet to destroy jobs on a vast scale,” said the Zoho co-founder, adding that the AI gains of today look “pale” in comparison with the “multiplied inefficiencies” built up over decades.