Zoho founder Sridhar Vembu blames India’s IT industry for creating financial bubble: ‘Sucked all oxygen’

The IT industry in India has been a primary growth driver for the country’s economy over the past many years, with rising exports, innovation and employment. However, Zoho founder Sridhar Vembu has a different take on the booming industry, which he said has “sucked all the oxygen”.

In a post on X, Vembu sounded an alarm on ‘financial bubbles’, which can suck resources and leave us with decreased capabilities. In the Indian context, the IT industry has acted as a financial bubble for a long time, he said.

Vembu used the analogy of a flash flood, which can cause structural damages.

“I have used the analogy “Flash floods can destroy existing ponds, leaving less water after the flood recedes”. This is the structural damage caused by flash floods,” he said.

He compared flash floods with financial bubbles, which can have similar effects on an industry.

“Financial bubbles (floods) are similar and they can have far ranging effects. When money pours into an industry too rapidly, it sucks resources, and can leave us with fewer capabilities than before, in other critical sectors that get neglected during the flood of money,” he said.

The IT issue

The Zoho founder also cited the example of Intel, which has reportedly been approached by Taiwan Semiconductor Manufacturing Company (TSMC) for a joint venture. This comes amid Intel’s struggles with finances, with the company reporting its first net loss since 1986.

“There is a reason Intel needs help from TSMC now – for at least a generation now, the smartest talent in silicon valley did not go into fabs. No investor would touch that sector because no big exits,” Vembu said.

The Zoho founder argued that the longer a financial bubble lasts, the more damaging it is.

“This is why financial bubbles are so damaging. And the longer a bubble lasts, the more structural (and cultural) damage it inflicts to more sectors.”

Vembu said that with the Indian IT industry “sucking all oxygen”, we have to make up for the lost time.

“In the Indian context, the IT industry sucked all the oxygen for a long time, leading to impairment and neglect of capabilities in numerous other critical industries. We have to make up for lost time,” he said.

Social media in agreement

Vembu’s observation resonated with many on the social media platform.

“Especially with the current generation blindly jumping into CS course or a job in IT irrespective of any major they chose in under grad / graduate is a mirror to this argument and quite discerning. As a matter of fact, we don’t get enough candidates to even appear for interviews to non IT roles, such is the damage caused,’ one person said.

“Sir I agree – IT’s rise drained talent from manufacturing, crippling skills & the builder’s mindset. The sector suffered a deep structural hit—few powerhouses, broken networks. Rebuilding will take decades of investment & the right mindset,” another added.