"No Layoffs, But No New Jobs": Zoho Founder Sridhar Vembu Warns AI Spending Is Eating Up IT Hiring Budgets

In a major reality check for lakhs of engineering graduates and job seekers across the country, Zoho co-founder and Chief Scientist Sridhar Vembu has warned that India's IT sector has significantly slowed down fresh hiring. Taking to social media on Sunday, Vembu shared that while tech companies, including Zoho, have managed to avoid large-scale layoffs, the industry is failing to generate new employment opportunities for the nation's young workforce. He described creating stable jobs for India's youth as the single biggest economic challenge facing the country today in an uncertain global market.

Explaining the main reason behind this hiring freeze, Vembu stated that corporate funds that were previously used to recruit and train fresh software engineers are now being diverted to meet the skyrocketing costs of Artificial Intelligence technology and data center infrastructure. He highlighted that sudden spikes in server and memory prices have forced companies to spend heavily on computing power rather than expanding their human teams. Furthermore, he noted that enterprise clients across the globe are also shifting their technology budgets toward AI investments instead of traditional software expansion.

Vembu further pointed out that while AI allows developers to write code much faster, the global software market is already overcrowded, meaning companies are now focusing on product quality and cost-cutting rather than rapid team expansion. Addressing whether other sectors like manufacturing could absorb young job seekers, he cautioned that heavy factory automation produces very few new jobs. Emphasizing that technology making goods cheaper is useless if young citizens lack stable incomes to buy them, Vembu urged industry leaders and policymakers to work together to find sustainable job creation solutions for India's massive youth population.