Sridhar Vembu, the founder and Chief Scientist of Zoho Corporation, recently took to social media to share his insights on the challenges facing the software job market. Contrary to popular belief, Vembu emphasised that artificial intelligence (AI) is not the primary cause of job losses in the industry. Instead, he identified six key factors contributing to the current struggles.
Vembu posted on X (formerly known as Twitter) about the ailing the software job market. Vembu highlighted that the software industry has accumulated massive inefficiencies over the years and how it is impacting the people.
Read the complete post shared by Zoho CEO here
What is ailing the software job market is not AI taking away jobs (not yet anyway).
Here is my thesis, as a participant and observer of software for 30 years. Over those 30 years:
1. Massive over-capacity steadily developed in
2. 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? Major corporations in the West have layers and layers of duplicated IT systems, lots of money spent to acquire them and even more money spent to get the disparate systems to work together. The more inefficient IT systems ended up becoming permanent resource drains, requiring vast human resources to simply keep them running.
3. Large enterprises in the West found those needed human resources in India – transferring those inefficiencies to
Result? A large number of IT jobs in India came to depend on those original inefficiencies and the multiplied inefficiencies.
4. Note how Indian banks and financial institutions are more IT savvy, while spending far less, than established financial majors in the US – Indian firms did not have the budgets to splurge! Necessity made them highly efficient and today India’s financial institutions are able to fend off foreign competition easily.
5. 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.
6. When people are billed by the hour or by the staff month(input metrics), as it happens often in IT services, there is zero incentive to remove those inefficiencies, to empower the 2 person team as opposed to hiring 20.
It is those multiplied inefficiencies in IT, built up over decades, that is facing a reckoning now.
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%
But those AI gains of today pale in comparison to the “multiplied inefficiencies” built up over decades.
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 pandemic unleashed another flood of money into enterprise IT.
Those floods are now history and we have a serious drought.
That is why I am pessimistic about the software job market, even before accounting for AI.