Zoho's Sridhar Vembu lists 6 reasons why he's not optimistic about software job market

Sridhar Vembu said he is pessimistic about the software job market, even without accounting for the impact of AI.

Zoho co-founder Sridhar Vembu recently aired his concerns about the software job market and said that as a "participant and observer of software for 30 years," he is not optimistic about it even after discounting the impact of artificial intelligence (AI). Taking to X, Vembu listed six pointers on what is ailing the job market.

The first factor he named was the "massive over-capacity steadily developed in enterprise software due to a flood of VC, PE and IPO money."

Vembu said that software vendors applied liberal doses of marketing spending to spread fear, uncertainty, and doubt among corporate customers, and the result was ever-growing IT spending. "Major corporations in the West have layers and layers of duplicated IT systems, lots of money spent to acquire them and even more money spent to get the disparate systems to work together," the Zoho chief scientist said. "The more inefficient IT systems ended up becoming permanent resource drains, requiring vast human resources to simply keep them running."

The third factor he listed was the transfer of Western inefficiency to India. "Large enterprises in the West found those needed human resources in India - transferring those inefficiencies to IT services firms in India, often multiplied by 3 or even 4! That 'multiplied inefficiency' happened because IT budgets were kept fixed in dollar terms and more people got hired in India to 'get more done,'" Vembu said. As a result, a large number of IT jobs in India came to depend on those original and multiplied inefficiencies, he added.

Here, Vembu said that Indian banks and financial institutions are more IT savvy than established financial majors in the US while spending much less because they did not have huge budgets and necessity made them highly efficient. Today, India's financial institutions are able to fend off foreign competition easily, he added.

Another aspect of the software job market is that often a two-person team can outperform a 20-person team while a 10-person team can do the work of a 200-person team, Vembu said, adding that "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."

In his last pointer, the Zoho boss said that when people are billed by the hour or by the staff month, there is zero incentive to remove those inefficiencies.

"It is those multiplied inefficiencies in IT, built up over decades, that is facing a reckoning now," Vembu said. "Now, enter AI... Depending on the nature of a project, AI can offer 10-20 percent productivity gains. Significant but not the 10x or 100x leap yet to destroy jobs on a vast scale. But those AI gains of today pale in comparison to the 'multiplied inefficiencies' built up over decades... That is why I am pessimistic about the software job market, even before accounting for AI."