Zoho’s Sridhar Vembu Calls For ‘Fresh Thinking’ In India’s IT Sector Amid Weak Q4

He attributed much of the current inefficiency to a decades-long asset bubble, explaining that these imbalances became ingrained in the Indian tech ecosystem

Back in January, Infosys had already cut its full-year guidance to 4.5–5 per cent, following a previous reduction in October to 3.75–4.5 per cent

Source : X

Zoho founder and chief scientist Sridhar Vembu voiced concerns over inefficiencies in India's software sector, calling for a fundamental shift in mindset on Friday. According to Vembu, both the product and services segments have long operated with inefficiencies that now demand "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,” Vembu wrote in a post on X (formerly Twitter). 

He attributed much of the current inefficiency to a decades-long asset bubble, explaining that these imbalances became ingrained in the Indian tech ecosystem. “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 noted.

Vembu’s remarks come in the wake of subdued growth projections from Infosys. The company recently forecast revenue growth of just 0 to 3 per cent for FY2025–26, reflecting persistent demand challenges. This marks the latest in a series of downward revisions. 

Back in January, Infosys had already cut its full-year guidance to 4.5–5 per cent, following a previous reduction in October to 3.75–4.5 per cent.

IT Sector Grappling With Subdued Demand

In its Q4 results, India’s second-largest IT firm reported a 12 per cent year-on-year drop in net profit, coming in at Rs 7,033 crore, below analyst expectations of Rs 7,278 crore. Meanwhile, consolidated revenue rose 7.9 per cent year-on-year to Rs 40,925 crore.

"We are only at the early stages of a long reckoning. 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,” Vembu said.

The software giant, like many of its peers in the IT sector, is grappling with subdued demand driven by reduced discretionary spending. Adding to the pressure are recent policy developments from US President Donald Trump, whose now-suspended tariff announcements have created additional headwinds for the industry.

This trend is consistent across the sector. While Tata Consultancy Services—India’s largest IT exporter—does not issue formal guidance, Wipro has forecast a revenue decline of between 1.5 per cent and 3.5 per cent for the first quarter of FY2026, reflecting continued weakness in client spending.