Zoho founder and Chief Scientist Sridhar Vembu has said that rising investments in artificial intelligence (AI) and data centre infrastructure are reducing the amount of money available for new hiring across the information technology (IT) industry.
In a post shared on X, Vembu noted that while companies like Zoho have largely avoided mass layoffs, hiring has slowed significantly as businesses allocate more resources toward AI-related infrastructure.
AI and Infrastructure Costs Rising
According to Vembu, the growing cost of AI development, along with increasing server and memory prices, is consuming budgets that would have otherwise been used to recruit new employees.
He said companies are attempting to manage these expenses, but many of the cost increases remain outside their control.
Questions Over AI’s Long-Term Value
Vembu also questioned whether the global software industry actually requires significantly more software, even if AI makes software development faster and more efficient.
He suggested that the software market has become increasingly saturated, with future growth likely to depend more on product quality, reliability, and brand reputation than rapid expansion.
Enterprise Spending Is Shifting
The Zoho founder noted that many enterprise customers are also redirecting their IT budgets toward AI initiatives. However, he expressed uncertainty about whether AI companies investing heavily in infrastructure today will generate enough future profits to justify their massive capital expenditure.
Employment Challenges Remain
Beyond the IT sector, Vembu said manufacturing may not be able to compensate for slowing technology hiring because modern factories are becoming increasingly automated and require fewer workers.
While automation makes products cheaper to produce, he argued that governments and policymakers will need to address how people continue earning enough income to purchase those goods.
He added that discussions around Universal Basic Income (UBI) and government welfare programmes are likely to become more prominent as countries grapple with long-term employment challenges in an AI-driven economy.
