Zoho's Sridhar Vembu explains why India's IT industry needs 'fresh thinking' amid weak Q4

Zoho founder Sridhar Vembu.

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Zoho founder and chief scientist Sridhar Vembu on April 18 said that India's broader software industry has been quite inefficient in both products and services, and that it requires a "fresh thinking".

"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 said in a post on X.

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. These https://t.co/hhOA9XUFfX
Sridhar Vembu (@svembu) April 18, 2025

He explained that inefficiencies in the software industry have accumulated over decades due to a prolonged asset bubble. "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)," he said.

Vembu's remarks follow the guidance issued by Infosys that projected revenue growth in the range of 0 percent to 3 percent for FY2025-26. In January, the Bengaluru-based firm had revised its revenue growth forecast for the full year down to 4.5 percent to 5 percent. This adjustment came three months after the company had reduced its guidance in October to 3.75 percent to 4.5 percent.

India’s second-largest IT services company also reported a 12 percent YoY decline in net profit at Rs 7,033 crore in the fourth quarter. This is below the consensus estimates of Rs 7,278 crore.

Consolidated revenue for the quarter came in at Rs 40,925 crore, up 7.9 percent YoY.

"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 software giant, along with other IT companies, is currently facing weak demand due to soft discretionary spending. Additionally, recent announcements by US President Donald Trump regarding the now-halted tariffs have negatively impacted IT firms.

This situation aligns with the observations made by other IT companies. While India’s largest IT exporter, Tata Consultancy Services, does not provide guidance, Wipro has projected revenue to decline between -1.5 percent and -3.5 percent for the first quarter of the financial year 2026.