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

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.

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.