The sentence worth sitting with

Zoho co-founder Sridhar Vembu posted on X that his company has not laid anyone off, and is also not creating new jobs.

Both halves matter. The layoff headlines get the attention, but a company that quietly stops hiring produces the same outcome for a graduating cohort — it just does it without a news cycle.

Where the hiring budget went

Vembu was specific about the substitution. Money that would have gone to new employees is now going to AI and data centre costs, pushed up by steep rises in server and memory prices. He said much of that cost is outside Zoho's control, and they're trying to contain it.

This is a more concrete claim than the usual "AI will change work" commentary. It's not that AI replaced particular workers. It's that the budget line those hires would have come from got consumed by infrastructure.

The demand-side problem

The part of Vembu's argument that deserves more attention is about the market rather than the technology. AI lets Zoho produce software faster — but he questions whether an already over-saturated global software market needs a lot more software: "does the over-saturated global software market need a lot more software?"

His read is that software is turning into a commodity industry, where the competition moves to quality, reliability and brand, and growth slows accordingly. Faster production into a saturated market doesn't generate proportionally more revenue — and so doesn't generate headcount.

He also notes enterprise customers have redirected their own IT budgets toward AI, and that the fast-growing AI companies are borrowing and spending enormously on capex, with no clarity yet that the profits will justify it.

Nothing obvious absorbs the displaced

The historical answer to a shrinking sector is that another one absorbs the workers. Vembu doesn't see the candidate: large-scale manufacturing is now automated enough that it produces few jobs.

For India specifically, this is the crux. The demographic argument for India's growth assumes a large young workforce entering productive employment. That assumption needs a sector doing volume hiring.

On UBI, he's asking rather than endorsing

Vembu grants the optimistic economics — automation makes goods genuinely cheap and widely affordable. His objection is structural: cheap goods don't help people with no income to buy them.

He raises Universal Basic Income as the commonly proposed fix, and makes a sharp observation about India — a version of it already exists there, in what get called freebies, and political pressure will push for more. Then he asks whether there's a better answer. He doesn't offer one.

For context, Sam Altman has put $14 million through OpenResearch, alongside $10 million from OpenAI, into one of the largest UBI trials run in the US, and has warned repeatedly that AI could displace millions of jobs.

Why this one lands differently

Plenty of executives theorise about AI and employment. Fewer say their own company's hiring budget is now buying servers instead of people — while their company is still profitable and not cutting staff. That's a description of what already happened, not a forecast, and it comes from someone with no particular incentive to say it.

Source: The Times of India