What is keeping India‘s engineers unemployed

Somewhere between a fifth to a third of the million students graduating out of India's engineering colleges run the risk of being unemployed. Others will take jobs well below their technical qualifications in a marketthere are few jobs for India's overflowing technical talent pool. Beset by a flood of institutes (offering a varying degree of education) and a shrinking market for their skills, India's engineers are struggling to subsist in an extremely challenging market. 

According to multiple estimates, India trains around 1.5 million engineers, which is more than the US and China combined. However, two key industries hiring these engineers information technology and manufacturing are actually hiring fewer people than before. 

For example, India's IT industry, a sponge for 50-75% of these engineers will hire 50,000 fewer people this year, according to Nasscom. Manufacturing, too, is facing a similar stasis, say HR consultants and skills evaluation firms. 

According to data AICTE, the regulator for technical education in India, there were 1,511 engineering colleges across India, graduating over 550,000 students back in 2006-07. Fuelled by fast growth, especially in the $110 billion outsourcing market, a raft of new colleges sprung up since then, the number of colleges and graduates have doubled. 

Job problems...

Jobs have, however, failed to keep pace. "The entire ecosystem has been built around feeding the IT industry," says Kamal Karanth, managing director of Kelly Services, a global HR consultancy. 

"But, the business model of IT companies has changed...customers are asking for more. The crisis is very real today." Placement numbers across institutes including tier-I colleges such as IIT Bombay have mirrored these struggles. 

In 2012-13, in IIT Bombay, a total of 1,501 students opted to go through the placement process. At the time of writing, only 1,005 had been placed (placements are currently underway in the institute). 

In 2011-12, 1,060 of the 1,389 students were placed. Further down the pecking order, at the Amity School of Engineering and Technology, placements are muted. The number of companies visiting is down 86 last year to 67 in 2013 at the time of writing (placements are currently underway). 

Batch sizes have reduced drastically at its Noida campus this year, with 365 students placed so far in a batch size of 459, compared to 1,032 being placed in a batch size of 1,160 last year. 

"Some companies have ed the joining dates of students who passed out last year and they are still waiting to be placed," says Ajay Rana, director, Amity Technical Placement Centre. "We can expect joining dates of students who passed out this year to be deferred by a minimum of six months." 

...Trickle down

This muddled equation is now showing signs of social and economic strain across the country. Frustrated engineers are taking jobs for which they are overqualified and, therefore, underpaid. 

A few exceptions have even turned to crime. According to media reports, Manjunath Reddy, a civil engineer, turned to chain snatching in Thane, a suburb of Mumbai, to support his young family. While he used some money to buy a small flat in peripheral Mumbai, his failure to net a job drove him to crime, he told the police when caught. 

Like him, another engineer in Aurangabad turned to car lifting as a route to easy money. "The social aspect of this massive under-employment and unemployment will soon be witnessed," warns Pratik Kumar, HR chief of Wipro and chief executive of its infrastructure engineering unit. 

Hiring is slowing down because recruiters are changing their strategy. "An engineering degree is a poor proxy for your education and employment skills," says Manish Sabharwal, chairman of TeamLease, a temp staffing firm. 

"The world of work is evolving... employers increasingly don't care what you know, they focus on what you can do with that knowledge." While dozens of new institutes have been established in the past six or eight years, he claims that over a third of them are empty and perhaps they are "worth more dead (for the real estate they sit on) than alive." 

A global economic slowdown may have only worsened what is already a bad problem, say others such as Amit Bansal, co-founder of Purple Leap, a skills assessment firm, which routinely gauges the capabilities of students across these institutes. 

"Even without this slowdown, there are a large number of students who won't get a job," he says. Bansal estimates that, at best, there are 150,000-200,000 jobs generated annually in the Indian economy and far too many engineers attacking this labour pool. 

What's more, India's technical talent pool is also warped, with almost the same number of engineers as technical graduates institutes such as ITI. "In developed markets, there is usually one engineer for every ten," says Bansal. This skew is only compounding the woes of engineers in India.