High youth unemployment looms in India as the slowing IT sector's hiring decreases.

• The decline in white-collar jobs in the IT sector has resulted in increased youth unemployment in India.
• The increasing adoption of automation and artificial intelligence is causing many IT roles to become obsolete, a trend that is not limited to India.
• Last year, the recruitment firm Foundit reported a 18% decrease in online hiring activity for both hardware and software IT positions compared to 2022.

The information technology sector in India is experiencing a decline in white-collar jobs, resulting in unemployment among young people and fresh graduates.

During the October to December period last year, the unemployment rate for 20-24 year olds in India increased to 44.49%, up from 43.65% in the previous quarter. Similarly, the unemployment rate for 25-29 year olds rose to 14.33% in the same period, compared to 13.35% in the prior quarter, according to the Centre for Monitoring Indian Economy.

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

According to Chandra Garisa, CEO of Foundit, while the economy has experienced consistent growth, employment rates have not kept up, particularly in the white-collar job market, particularly in the IT sector, where availability has been declining.

The IT and services sector, which employs a significant number of white-collar workers, has seen a slowdown in hiring, according to him.

The increasing adoption of automation and artificial intelligence is causing many IT roles to become obsolete, a trend that is not limited to India.

Garisa observed that while college graduates were previously hired for basic skills, technology now handles those tasks.

Online hiring for IT hardware and software decreased by 18% last year, with IT being the sector that experienced the largest decline in hiring activity. Additionally, there was a 5% overall drop in job postings in 2023 compared to the previous year.

Suyash Rai, deputy director and fellow at Carnegie India, stated that the growing disparity between job demand and supply is a pressing social issue in India, as he spoke to CNBC.

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

Skills mismatch

The mismatch of skills between students and job opportunities in India is a significant factor contributing to youth unemployment, as many students are trained for the IT sector but job growth is occurring in the manufacturing industry, according to Garisa.

"The shift in demand across sectors and advancements in technology are creating a skills mismatch," he stated.

In February, the manufacturing sector saw a 6% increase in job postings compared to the previous month, while IT postings decreased by 9%, according to Foundit.

"The hiring sectors that were popular in the past are not the same ones that are currently growing and hiring," Garisa stated. "The job market has changed significantly, and the requirements for a fresh graduate today are vastly different from those of five or even two years ago."

Last year, the number of jobs in the manufacturing sector that required AI skills increased by 21%, up from 8% in 2022. The positions for data analysts and junior technical software engineers experienced the greatest growth.

Some candidates may not take advantage of emerging new jobs in the manufacturing sector because there is still a perception among the youth that careers in this field are not as good as those in IT, as Garisa pointed out.

"Outgoing graduates from college need to view these as quality career opportunities more significantly."