Zoho CEO Sridhar Vembu disagrees with the notion that Trump tariffs or the surge in AI-powered automation is the rationale behind the “cyclical downturn” in India’s IT sector.
Indian IT majors, together with Tata Group’s Tata Consultancy Providers (TCS), Narayana Murthy-led Infosys, and Azim Premji’s Wipro lately expressed uncertainty over the annual wage hike of their employees amidst the the fallout of US President Donald Trump’s reciprocal tariffs, which triggered pandemonium throughout world markets.
Nevertheless, Zoho CEO Sridhar Vembu disagrees with the notion that Trump tariffs or the surge in AI-powered automation is the rationale behind the “cyclical downturn” in India’s IT sector. Vembu believes that the Indian software program providers trade has been fairly inefficient, each in services and products, and “these inefficiencies have gathered over many years of a protracted asset bubble”.
“Sadly, we tailored to quite a bit of these inefficiencies in India. Our jobs got here to rely upon them. The IT trade sucked in expertise which will have gone into manufacturing or infrastructure ,” the Zoho founder wrote on X.
My working thesis: what we’re seeing isn’t just a cyclical downturn and it’s not simply AI associated. Even with out the uncertainty induced by tariffs, there was hassle forward.
The broader software program trade has been fairly inefficient, each in services and products. These… https://t.co/hhOA9XUFfX
— Sridhar Vembu (@svembu) April 18, 2025
“We’re solely in the early phases of an extended reckoning. My thesis is that the final 30 years should not a great information submit to the subsequent 30 years. We’re actually at an inflection level. We have now to problem our assumptions and do contemporary pondering,” added Sridhar Vembu.
Vembu’s feedback got here after India IT majors, together with TCS, Wipro, and extra lately Narayana Murthy-led Infosys, reported disastrous earnings this quarter amid the risk of a US-China commerce battle triggered by Trump’s reciprocal tariffs.
Layoffs enroute, wage hike unlikely?
In response to analysts, the continuing uncertainty in the worldwide markets may set off a possible slowdown in the Indian IT sector, and majors like Infosys, TCS, and Wipro could even pressured to announce layoffs if the downturn continues.
Just lately, Wipro and TCS had expressed uncertainty over the annual wage hike of their employees, citing that selections might be made in keeping with the prevailing state of affairs.
“We had spoken about enhancing market sentiments and early indicators of discretionary spending revival in January. This was not sustained due to many of the discussions round tariffs. We’re observing delays in decision-making and venture begins with respect to discretionary investments,” TCS CEO Ok. Krithivasan, informed reporters at a presser on April 10, a day after Trump introduced a 90-day pause on his retaliatory tariffs on all international locations barring China.
Wipro CEO Srinivas Pallia expressed related sentiments about wage hikes in FY26, saying the corporate will decide on the matter “nearer to the date”. Pallia mentioned that Trump tariffs towards China have “dramatically elevated” uncertainties in the providers sectors, and will damage Wipro’s European purchasers in the approaching future.
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