Zoho CEO and founder Sridhar Vembu recently warned about the Software Jobs struggle. He believes AI is not the only villain behind software jobs’ eating. He exposed the real cause of the Software Jobs slump. According to him, the game is even bigger than your expectations. Let’s explore all the real causes he exposed in very easy language.
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Zoho CEO Sridhar Vembu: AI Is Not Taking Away Jobs.
Sridhar Vembu, founder and CEO of Zoho, took social media X (formerly Twitter), exposing the real cause of the Software Jobs slump. He says AI is not the only thing responsible.
He wrote in the post, “What is ailing the software jobs market is not AI taking away jobs (not yet anyway).” He shares his thesis, which includes his 30 years of participation and observation of Software.
Sridhar Vembu: Over Decades, Multiplied Inefficiencies Were Built Up.
Sridhar Vembu believes that over the decades, multiple inefficiencies and bloated departments were built. Those inefficiencies are like this:
- Vembu revealed that over the years, Venture Capital (VC), Private Equity (PE), and Initial Public Ofering (IPO) poured money into these Software companies. This led to a massive over-capacity steadily development in enterprise software.
- He says that Software vendors applied liberal doses of marketing spending to spread Fear (of missing out) and Uncertainty (“tech is changing, you need us”) and Doubt (“are you confused? trust us”) among corporate customers, and the result was ever-growing IT spending. Enterprise IT budgets kept rising because which CIO or Board would want to be seen as lagging?
- Large enterprises in the West found those needed human resources in India – transferring those inefficiencies to IT services firms in India, often multiplied by 3 or even 4! That “multiplied inefficiency” happened because IT budgets were kept fixed in dollar terms, and more people got hired in India to “get more done”.
- He further explains, Now look at Indian IT giants, didn’t have budget to spend blindlessly, so they built efficient IT systems. While Westerners spent freely, forming a bloated and inefficient IT department that required constant maintenance.
- One of the deep facts about software is that often a 2-person team can solidly outperform a 20-person team, and a 10-person team can do the work of a 200-person team. This is not just due to talent disparity – even when the large teams have equivalent talented people, they can easily end up being wasted on unproductive projects, Vembu added.
These Inefficiencies Are Facing Reckoning- Money Is Drying Up.
It is those multiplied inefficiencies built up over decades that are facing a reckoning now. As Money is drying up, it had funded all these inefficiencies. He said, “This reckoning nearly happened in the aftermath of the Global Financial Crisis (GFC 2008-9). It got postponed because the central banks flooded the world with money, and a part of that money flooded into enterprise IT.”
The Covid Pandemic had unleashed another flood of money into enterprise IT. But those floods of money are now history, now we have a serious drought of money, imposing a challenge for Interprises IT to run the inefficiency further.
Is AI Not Responsible For Software Job Struggle?
Regarding AI’s danger to Software jobs, he wrote, “Now enter AI. A large amount of code is boilerplate code in many projects, and AI can eat such code for breakfast. Depending on the nature of a project, AI can offer 10-20% productivity gains. Significant but not the 10x or 100x leap yet to destroy jobs on a vast scale.”
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