India faces high youth unemployment as recruitment in its IT sector slows

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The employees work at the headquarters of security systems developer Staku Technologies in Gurugram, India.

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India is facing the problem of youth unemployment as the decline in white collar jobs in its information technology sector has left many fresh graduates and youth unemployed.

In the October to December period last year, unemployment among India’s youth aged 20 to 24 rose to 44.49%, from 43.65% in the previous quarter. According to the Center for Monitoring Indian Economy, unemployment among 25 to 29-year-olds rose to 14.33% in the same period from 13.35% in the previous quarter.

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 recent government data.

“We have seen continued high growth in the economy, but I don’t think employment has kept pace,” said Chandra Garisa, CEO of recruitment firm Foundit, noting the availability of white-collar jobs, particularly in the IT sector. is on the decline.

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

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

“Earlier, most college graduates were hired for basic skills, but now those basic skills are being taken care of by technology,” Garissa noted.

Data from Foundit shows that online hiring for both the IT hardware and software segments last year declined by 18% from 2022. Among the 14 sectors in the study, IT saw the largest drop in hiring activity. Overall, job postings declined by 5% in 2023 from the previous year.

“The mismatch between supply and demand for jobs is becoming a major social issue in India,” Suyyash Rai, deputy director and fellow at Carnegie India, told CNBC.

The IT sector is estimated to employ 5.4 million people in the fiscal year ending March 2023. According to the Ministry of Electronics and IT.

Skills don’t match

Youth unemployment in India is also driven by a “temporary skills mismatch” as many students are equipped with skills for the IT sector, but jobs are being created in the manufacturing industry,” Garissa said.

“Two big things are creating a skills mismatch – changes in demand in sectors that are opening up more opportunities, and advances in technology that are making basic skills irrelevant,” he added.

In February, job postings in the manufacturing sector rose 6% from the previous month while IT postings fell 9%, according to Foundit.

“Fields that traditionally recruited in the past are not the ones that are growing and recruiting now,” Garissa said. “What is being demanded of a new graduate now is very different than it was five years ago or even two years ago.”

For instance, jobs in the manufacturing sector that required AI skills grew 21% last year to just 8% in 2022, with positions for data analysts and junior technical software engineers seeing the biggest jumps, according to Foundit.

Garisa highlighted that there is still a perception among young people that a career in the manufacturing sector is not as good as IT – meaning some candidates may not be able to take advantage of new jobs emerging.

“That’s changing, but it needs to change a lot for outgoing college graduates to really see these as quality career opportunities.”

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