India stares at high youth unemployment as hiring in its IT sector slows

Employees work at the headquarters of security systems developer Staqu Technologies in Gurugram, India.

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India faces a youth unemployment problem as the decline of white-collar jobs in the information technology sector has left many young graduates and young people unemployed.

Between October and December last year, unemployment among Indian youth aged 20-24 reached 44.49%, up from 43.65% in the previous quarter. Unemployment among 25-29 year olds reached 14.33% during the same period, compared to 13.35% in the previous quarter, according to the Center for Indian Economic Monitoring.

The world’s most populous country, which also has the world’s largest youth population, had 43.3 million university enrollments in the fiscal year ending March 2022., according to the latest government data.

“We’ve seen consistently high economic growth, but I don’t think employment has kept pace,” said Chandra Garisa, CEO of recruiting firm Foundit, explaining that the availability of white-collar jobs, especially in the IT sector, has increased. been in decline.

“One of the largest segments that employs white-collar workers is IT and services, and hiring in that sector has slowed significantly,” he told CNBC.

As the adoption of automation and artificial intelligence accelerates, many IT roles are becoming redundant – a phenomenon that is not limited to India.

“Previously, the vast majority of college graduates were hired to learn basic skills, but now those basic skills are provided by technology,” Garisa noted.

Data from Foundit showed that online hiring for computer hardware and software sections fell 18% last year compared to 2022. IT saw the biggest drop in hiring activity. hiring in the 14 sectors of the study. There was also an overall 5% drop in job openings in 2023 compared to the previous year.

“There is a mismatch between the demand and supply of jobs and this is becoming a bigger social problem in India,” Suyash Rai, deputy director and researcher at Carnegie India, told CNBC.

The IT sector is estimated to have employed 5.4 million people in the financial year ending March 2023, according to the Ministry of Electronics and IT.

Skills mismatch

Youth unemployment in India is also due to a “transitional skills mismatch”, as many students have skills for the IT sector, but job creation is happening in the manufacturing industry, said Garisa.

“Two big factors create a skills mismatch: changing demand across sectors, which opens up more opportunities, and technological advances that make basic skills redundant,” he added.

In February, manufacturing job postings increased 6% from the previous month, while IT job postings decreased 9%, according to Foundit.

“The sectors that were traditionally hiring in the past are not the same ones that are growing and hiring today,” Garisa said. “What is required of a young graduate today is very different from five years ago, or even two years ago.”

For example, manufacturing jobs that required AI skills grew 21% last year, compared to just 8% in 2022, with positions for data analysts and junior technical software engineers seeing the largest increases. more important, according to Foundit.

Garisa pointed out that there is still a feeling among young people that careers in manufacturing are not as good as those in IT, meaning some candidates may not be able to capitalize on the new jobs. emerging.

“That is changing, but it needs to change a lot more for graduates coming out of college to actually view these opportunities as quality career opportunities.”


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