Zoho's Sridhar Vembu Calls for 'Fresh Thinking' in India's IT Sector Amid Weak Q4 Performance
Zoho Founder and Chief Scientist Sridhar Vembu has said that India's broader software industry is facing structural inefficiencies that require 'fresh thinking' rather than attributing the current slowdown merely to cyclical factors or the rise of AI.
Taking to X on April 18, Vembu remarked, “My operating thesis is that what we are witnessing is not just a cyclical downturn and is not solely related to AI. Even without the uncertainty caused by tariffs, challenges were already on the horizon”.
He attributed the issues to long-standing inefficiencies that have built up over decades due to a sustained asset bubble, stating, “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 (for example)”.
His comments come amid a weak earnings season for India’s top IT firms. Infosys, the country’s second-largest IT services company, recently projected revenue growth in the range of 0 to 3 percent for FY2025-26. Earlier in January, the company had revised its full-year forecast to 4.5 to 5 percent, down from its October guidance of 3.75 to 4.5 percent.
In Q4, Infosys reported a 12 percent year-on-year decline in net profit at Rs 7,033 crore, missing consensus estimates of Rs 7,278 crore. Consolidated revenue for the quarter stood at Rs 40,925 crore, reflecting a 7.9 percent year-on-year growth.
“We are only at the early stages of a long reckoning,” Vembu said. “My thesis is that the last 30 years will not serve as a reliable guide for the next 30 years. We are genuinely at an inflection point. We have to challenge our assumptions and do fresh thinking”.
The Indian software industry is facing tepid demand, largely due to reduced discretionary spending globally. The recent uncertainty around trade policies, including the now-halted tariffs announced by former U.S. President Donald Trump, has added further strain on the sector.
Other IT giants are also feeling the pinch. Wipro has forecast a revenue decline of -1.5 percent to -3.5 percent for Q1 FY26, while Tata Consultancy Services (TCS) continues to refrain from issuing revenue guidance.
