Zoho founder Sridhar Vembu has challenged the prevailing narrative that artificial intelligence is the primary cause of recent widespread layoffs across various industries. Instead, Vembu asserts that deeper economic pressures and rising operational costs are the true drivers behind job cuts, warning that the global economy is entering a more challenging phase.
"Companies are blaming job losses on AI, which is both convenient and as an added bonus, makes a company look visionary," Vembu stated. He highlighted that this perception contributes to a growing negative sentiment towards AI, even among college students in leading AI nations like the US.
Beyond the AI Hype: Economic Realities
Vembu emphasized that the layoffs reflect tangible financial strains. "The layoffs are related to rising cost pressures — we experience those pressures too, so we know this firsthand. The economic picture is getting grimme," he wrote. He also cautioned against the belief that heavy investment in AI can indefinitely bolster economic growth, describing the current situation as an "AI investment bubble" that has temporarily kept the US economy afloat.
The tech entrepreneur offered a broader historical perspective, suggesting that the world is witnessing "the gradual collapse of the post World War 2 global economic and political order." He pointed to the 2008-09 global financial crisis as an earlier indicator of this trend, arguing that technological advancements like the iPhone's mobile revolution did not prevent that downturn, and AI will similarly "not magically cure global imbalances."
Companies Cite AI Amidst Layoffs
Vembu's comments come as numerous major US technology firms have indeed cited AI initiatives and automation as factors in their restructuring efforts and workforce reductions. For instance, Amazon announced 14,000 corporate role eliminations, partly to reallocate resources towards AI. Salesforce also mentioned AI agents taking over customer service functions after cutting approximately 4,000 support jobs. Other companies, including IBM, CrowdStrike, and Workday, have similarly linked layoffs to AI-led restructuring or investment priorities.
However, analysts often provide a more nuanced view, suggesting that many job reductions also stem from post-pandemic over-hiring and broader corporate cost-cutting mandates. Data from consulting firm Challenger, Gray & Christmas indicated that AI was referenced in nearly 55,000 US job eliminations in 2025, underscoring the public and corporate perception of AI's role.
Vembu concluded with a call for preparedness: "We must prepare for tough times ahead. I would be happy to be proved wrong, so please present ideas that disagree with this."