We had offered ₹4.5 lakh per annum salary to an MBA fresher after she had interned with us; the Dean of the college told her not to take the offer as they had benchmarked ₹6 lakh as the cut-off this year. Ninety per cent of that batch is still not placed this year. But it seems they would rather wait it out.

I asked one of the VPs in a large GCC to get a job for my niece, who is a computer science engineering graduate. He said he didn’t want to ask any favours from his company this year as his daughter was also graduating. “I want to keep all the influence for my daughter when she passes out this year. As you know, it’s becoming tougher for freshers, and I don’t want to exhaust my best options before she graduates.”

A friend’s daughter declined a job offer from a 17-year-old MSME IT firm where she interned as a software developer for a month. “Many of my batchmates who passed with lesser CGPA have got offers from larger brands. I don’t want to spend five minutes explaining what my company does. When I take the name of my employer, it should ring a bell,” she said.

An MD of a large tech company called to say his daughter had got a good campus offer but was concerned about the bond and penalty if she leaves within two years.

My neighbour’s son who has done his BBA got a contractual job with a Big 4 consulting firm but felt downgraded as it’s not direct employment. He is now in Melbourne after his post graduation, working through a staffing agency with a large bank.

This is just my experience amongst the 1.07+ crore students who pass out in various specialisations each year. By now, you would have a fair idea of what’s broken in our system.

Campus Hiring

There is huge outrage when large IT Services companies don’t visit campuses for hiring as three million Indian homes have engineering students. The total value of education loans disbursed has grown in leaps and bounds post-pandemic. The current fiscal’s outstanding education loans are said to be well above ₹1.1 lakh crore, an over 20 per cent growth over the previous year. With loans for engineering streams accounting for 40 per cent of the total disbursals, there are at any given point 7-8 lakh engineering graduates with an education loan liability and hence the heartbreak is understandable.

The data speaks for itself. The intake of freshers from large Indian tech firms has been significant over the years. In the post-pandemic over-hiring race, an all-time high of 6 lakh freshers were recruited by tech companies in 2022. This resulted in an additional 20,000 students enrolling for computer science courses in 2022 over 2021. When 8 lakh plus engineers graduate, and about 2.2 lakh are specialised in computer science, enterprises are spoilt for choices. We also know that in the last 12 months, the top 8 IT services companies have collectively reduced their headcounts by 75,000. Beyond the imminent but unquantifiable Gen AI threat to IT jobs, there is a demand issue thanks to the multiple wars being raged globally, which is impacting the macroeconomics.

The Wage Issue

There are very few high-paid jobs for freshers, and unfortunately, the attractive Day 1 campus placements at premium colleges can be misleading. Less than 10,000 engineering graduates get a campus placement of more than ₹10 lakh. With 8.2 lakh engineers passing out every year, the supply has always superseded demand by a large margin. So, would you be on the side that criticizes the IT Services companies for paying most of their campus recruits a 20-year dated ₹3.5 lakh per annum salary or appreciate that these companies hire lakhs of them every year? Even in a bad year like the current, they will end up hiring 75,000 freshers.

The MBA Cauldron

There are about 44 lakh MBA graduates in India now, and their count increased by about 11 per cent last year. The IT sector is the top industry for employment of MBAs, i.e. 19 per cent of them with less than 2 years’ experience. We added 2.34 lakh MBAs to the workforce last year. One can complain about the mushrooming of the MBA institutes or commend that the reach of this higher education form has reached Tier 3 towns of India. However, 2024 is bad timing for MBA freshers. Picture this: there were about 4,000 open jobs for MBA freshers in 2022, which dropped to 2000 in 2023.

The Productivity paradox

Enterprises are punished for poor productivity/results by shareholders. In developed European countries, apprenticeships ensure the workers are relatively more job-ready and productive when they are hired. Whereas in India in the absence of strong apprentice and internship programmes, enterprises are forced to invest heavily in training freshers, and it takes 3-4 quarters for these employees to turn productive. However, the low wage entry points also mean enterprises have a higher attrition at the bottom of the pyramid leading to lower productivity.

The Frills Mindset

Organisations are also caught in the web of Employer Value Propositions. Even before the freshers have joined them, they start flaunting their badges like Great Place to Work, Hybrid culture, and unlimited leaves where wellness precedes work. The entitlement mindset enterprises breed at the entry point of employment is worth reflecting on while hiring freshers.

With more than 6,000 listed companies, 40,000 MNCs and 3 crore MSMEs, there are substantial opportunities for freshers who are getting into the job market. The friction of Skills/Salary/Location/Timing has to be solved by all of us.

Peter Drucker said if we want something new, we have to stop doing something old!

We can start by bringing in a mindset of ‘some work vs no work’ into our kids. The urban students are spoilt by lack of work orientation, how many of our college going kids intern in their summer breaks instead of taking an overseas vacation. Do our urban fresher grads suffer from a positioning problem, and the freshers from the hinterland from a skill gap and opportunities?

(Kamal Karanth is co-founder of Xpheno, a specialist staffing firm)