Bad news for employees of Ratan Tata’s TCS, Narayana Murthy-led Infosys as…., Zoho’s Sridhar Vembu flags ‘inefficiency’ in IT sector due to…
Indian IT majors, including Tata Group’s Tata Consultancy Services (TCS), Narayana Murthy-led Infosys, and Azim Premji’s Wipro recently expressed uncertainty over the annual salary hike of their employees amidst the the fallout of US President Donald Trump’s reciprocal tariffs, which triggered pandemonium across global markets.
However, Zoho CEO Sridhar Vembu disagrees with the notion that Trump tariffs or the surge in AI-powered automation is the reason behind the “cyclical downturn” in India’s IT sector. Vembu believes that the Indian software services industry has been quite inefficient, both in products and services, and “these inefficiencies have accumulated over decades of a prolonged asset bubble”.
“Sadly, we adapted to a lot of those inefficiencies in India. Our jobs came to depend on them. The IT industry sucked in talent that may have gone into manufacturing or infrastructure ,” the Zoho founder wrote on X.
“We are only in the early stages of a long reckoning. 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. We have to challenge our assumptions and do fresh thinking,” added Sridhar Vembu.
Vembu’s comments came after India IT majors, including TCS, Wipro, and more recently Narayana Murthy-led Infosys, reported disastrous earnings this quarter amid the threat of a US-China trade war triggered by Trump’s reciprocal tariffs.
Layoffs enroute, salary hike unlikely?
According to analysts, the ongoing uncertainty in the global markets could trigger a potential slowdown in the Indian IT sector, and majors like Infosys, TCS, and Wipro may even forced to announce layoffs if the downturn continues.
Recently, Wipro and TCS had expressed uncertainty over the annual salary hike of their employees, citing that decisions will be made according to the prevailing situation.
“We had spoken about improving market sentiments and early signs of discretionary spending revival in January. This was not sustained due to many of the discussions around tariffs. We are observing delays in decision-making and project starts with respect to discretionary investments,” TCS CEO K. Krithivasan, told reporters at a presser on April 10, a day after Trump announced a 90-day pause on his retaliatory tariffs on all countries barring China.
Wipro CEO Srinivas Pallia expressed similar sentiments about salary hikes in FY26, saying the company will make a decision on the matter “closer to the date”. Pallia said that Trump tariffs against China have “dramatically increased” uncertainties in the services sectors, and could hurt Wipro’s European clients in the coming future.
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