Infosys, TCS, Wipro struggling? Sridhar Vembu says IT’s great reckoning is here; calls for fresh thinking

Zoho founder and veteran of the Indian information technology industry, Sridhar Vembu has issued a stark warning about the state of the global software industry, and especially about India, arguing that the current slowdown in the IT sector is not merely cyclical or driven by artificial intelligence (AI), as many seems to suggest. It is, instead, deeper, and far more structural.

In a post on X (formerly Twitter), Vembu wrote: “My operating thesis [is that] what we are seeing is not just a cyclical downturn and it is not just AI related... The broader software industry has been quite inefficient, both in products and services. These inefficiencies have accumulated over decades of a prolonged asset bubble... We are only in the early stages of a long reckoning.”

He added that India’s over-dependence on IT jobs — often fuelled by inefficiencies in global demand — may have diverted talent away from sectors like manufacturing and infrastructure. “Sadly, we adapted to a lot of those inefficiencies in India. Our jobs came to depend on them,” he noted.

Vembu’s post comes in the wake of distressing financials from the country's top-most IT firms. Infosys , India’s second-largest IT firm, yesterday projected a revenue growth of just 0–3% for FY25–26. This follows multiple downward revisions: in January, Infosys had slashed its guidance to 4.5–5%, down from the 3.75–4.5% forecast in October 2024.

The Bengaluru-based company also reported a 12% year-on-year decline in Q4 net profit to ₹7,033 crore — missing consensus estimates pegged at ₹7,278 crore.

The entire sector is under pressure. Tata Consultancy Services (TCS) , which doesn’t provide forward guidance, also has acknowledged weak discretionary spending. Wipro , meanwhile, has projected a revenue contraction of –1.5% to –3.5% for Q1 FY25–26, which forced the IT giant’s share price on Friday to go on a tailspin.

Analysts have repeatedly pointed to a combination of factors affecting the IT sector: macroeconomic uncertainty, US trade policy disruptions — including tariff-related anxieties — and the shifting priorities of global clients embracing AI while cutting back on legacy IT projects.

But Vembu believes these explanations barely scratch the surface.

“My thesis is that the last 30 years are not a good guide post to the next 30 years. We are truly at an inflection point,” he wrote, urging the industry to challenge assumptions and engage in “fresh thinking.”