New Delhi– The recent slowdown in India’s information technology (IT) sector is not merely a result of artificial intelligence (AI) disruption or former U.S. President Donald Trump’s reciprocal tariffs, but also stems from deep-rooted inefficiencies in the broader software industry, Zoho Corporation founder Sridhar Vembu said on Friday.
In a post on social media platform X, Vembu offered a broader analysis of the industry’s challenges: “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. The broader software industry has been quite inefficient, both in products and services.”
He argued that these inefficiencies have been accumulating over decades, fueled by an extended period of asset bubbles. “Sadly, we adapted to a lot of those inefficiencies in India. Our jobs came to depend on them. The IT industry drew talent that might have otherwise gone into manufacturing or infrastructure,” Vembu noted.
According to Vembu, the sector is entering a period of prolonged structural adjustment. “We are only in the early stages of a long reckoning. My thesis is that the last 30 years are not a good guidepost to the next 30 years. We are truly at an inflection point,” he added, urging a reexamination of long-held assumptions and a shift toward fresh thinking.
Vembu’s remarks come as major Indian IT firms, including Tata Consultancy Services (TCS), Infosys, and Wipro, posted subdued earnings for the fourth quarter of FY2024–25, with weak guidance adding to investor concerns.
Infosys, India’s second-largest IT firm, reported an 11.7% year-on-year decline in consolidated net profit for Q4 FY25, falling to ₹7,033 crore from ₹7,969 crore a year earlier. However, revenue rose nearly 8% year-on-year to ₹40,925 crore from ₹37,923 crore.
The company posted an operating margin of 21%, slightly lower than the 21.3% recorded in the previous quarter, though an improvement from 20.1% a year ago.
Analysts suggest that ongoing global uncertainties, delayed order inflows, and tariff-related headwinds have contributed to the muted performance, reinforcing the need for structural reforms and innovation in the Indian IT services landscape. (Source: IANS)
