Cover Story | Outdated Degrees, Fewer Jobs And India's Crisis Of Employability

Shimpi Kumari, 25, often feels emotionally burdened. Ever since her father, a school teacher, passed away seven years ago, the family’s bank balance hasn’t stabilised. For as long as she can remember, Kumari has wanted to contribute financially to help her homemaker mother and take care of her specially abled brother. It’s the frustration of not finding a job that is leading to her emotional distress.

It’s not that she lacks the credentials. Despite the hardships, she managed to graduate with a zoology degree. She even received Rs 50,000 as a merit scholarship from the Bihar government. But when she started floating her resume, she realised her degree wasn’t enough. Based in Madhubani, she then took online classes to add skills like Excel and PowerPoint to her resume. She thought she would get a job as a data entry operator, but that did not happen. So, she started to prepare for entrance exams for government jobs.

Now, it’s been three years. Neither has she managed to crack any exam nor has she found a job. The financial struggles faced by the family on a daily basis sometimes make her wonder: what was the point in investing three years in a degree that didn’t even translate into a job?

Hundreds of kilometres away, in Delhi, Dayanand Sharma (name changed), 35, a Ph.D in geography, is dealing with a similar issue. Even after years of hard work, he is struggling to find a permanent job. He has been working as a guest lecturer in a college in outer Delhi for the past four years, a stint that won’t even get counted as experience for permanent placement as an assistant professor. While the Rs 50,000 a month payment is not enough to sustain his family of three, which includes his wife and daughter, the amount does not get credited during summer months and other holidays when the college is shut. “Even an entry-level job pays more than what we get after years of academic research. You may have a research paper published, but that does not guarantee a job,” says Sharma.

Kumari and Sharma are not alone. There are millions of youngsters with degrees in hand, but no jobs. As per NITI Aayog’s Reimagining Skilling for Viksit Bharat report, published in August, graduate unemployment stands at 13 per cent, considerably higher than the national unemployment rate of 3.2 per cent. In effect, graduates appear to face a much harder time finding work than the overall workforce.

Moreover, the scramble for jobs often results in a mismatch between employment and degrees—only 8.25 per cent of graduates in India work in jobs that match their qualifications, says the NITI Aayog report. It also mentions that some degree programmes like Bachelor of Arts (B.A), Bachelor of Science (B.Sc) and Bachelor of commerce (B.Com) are not leading to enough jobs. Yet, a large number of youngsters continue to pursue these degrees. Of the 3.4 crore students enrolled in undergraduate programmes, combined enrolment in these three disciplines exceeds two crore.

Experts say that the issue is not just a lack of jobs. There is also a large skills gap in play. Students have degrees, diplomas and certificates, but because of outdated curricula in many colleges and institutions and higher and technical education failing to keep pace with changing industry requirements, they lack the required vocational skills, practical knowledge, experience, cognitive ability and collaborative approach to keep pace with a demanding work culture.

With about 65 per cent of its people under the age of 35, India has the largest youth population in the world. India’s demographic dividend presents an opportunity of accelerated economic growth, social mobility and global competitiveness. Yet, the presence of a large number of unemployable graduates in the country threatens to turn India’s demographic dividend into demographic liability, says Sushila Ramaswamy, retired professor of political science, Jesus and Mary College, Delhi University. “Most graduates lack basic skills, making the degrees not worth the paper they are printed on,” she adds.

The Good Old Days

Historically, a degree served as a filter: it signalled that someone had acquired a certain level of education, discipline and knowledge. 

Soon after Independence, nation-building required educated human capital, but in a country where access to even school education remained limited, a college degree was relatively uncommon. The trend changed by the 1960s when the government became one of the biggest white-collar employers. Becoming a government officer was one of the most prized career goals. A graduate degree carried considerable economic and occupational value, particularly visible in the expanding clerical, secretarial, administrative and office workforce of government offices, banks and public-sector institutions. A large number of graduate women worked in clerical and stenographic work.

For generations, government jobs became the archetypal aspiration for graduates as they provided a socially recognised pathway to economic security, respectability and upward mobility, says retired Indian Administrative Service officer Alok Awasthi. “In a country with limited formal-sector employment, a developing private industrial base, deep social hierarchies and a large rural population, government service offered a secure place in society,” he adds.

While government jobs lured young graduates, the plain vanilla B.A, B.Com and B.Sc degrees, despite lacking specialised industry-specific skills and technical tracks, continued to be lapped up by youngsters even though there was no guarantee that they would fetch jobs. These degrees were cheaper, heavily subsidised and easily available in almost all colleges, even in small towns, says Satish Singh, professor of philosophy at Banaras Hindu University.

The trend picked up steam in 1991 when India’s service industry expanded rapidly after the economic liberalisation. The reforms opened the economy to greater private investment, foreign companies, competition and global markets, helping sectors such as banking, telecommunications, information technology (IT), finance, tourism and retail grow significantly.

It created opportunities for Indian companies to provide services to overseas clients at competitive costs. Youngsters with basic English proficiency, computer literacy and customer-handling skills were trained to work in graveyard shifts. The business process outsourcing (BPO) boom, which coincided with stagnating public-sector employment, provided the young workforce with multiple opportunities. “India had the early advantage comprising talent, language capability, cost, process discipline and the ability to deliver at scale,” says Ajoy Thomas, director, Staffing Titans, a hiring and staffing firm based in Delhi.

The BPO boom gathered momentum in the late 1990s and accelerated through the 2000s, turning many cities into major IT and outsourcing hubs. “Every degree was a gamble to get a job in the booming service sector. Since Indian labour was cheap, walk-in interviews with on-the-job training gave much-needed respite to graduates,” says Prerna Sinha, a BPO worker.

The overall boom in the services sector in the 2000s created new routes into corporate employment. In a fast-growing economy, there were roles for a young English-speaking cohort of graduates who easily fit into the employment matrix of the 2000s. The service sector employed approximately 9.4 crore people in 1999-2000, rising to 11.6 crore in 2009—10. The average annual salaries for freshers ranged between Rs 1–2.5 lakh, depending on the sector and nature of job.

The service sector boom changed the perceived value of a college degree. Apart from the plain vanilla degrees, courses like tech, engineering, computer application, management, business administration and chartered accountancy were in demand. Colleges and institutions offering these courses mushroomed. While there were approximately 800 management colleges in the year 2000, the number of private, unaided engineering colleges more than tripled between 1990 and 2000.

With 19 crore people presently employed, the service sector continues to be one of India’s largest job providers. The number of management and engineering colleges has increased to 5,000 and 6,000, respectively. India recorded approximately 1.09 crore graduates across all disciplines in 2022–23. But do these graduates have requisite skills necessary to sustain them in the cut-throat job market or their degrees are simply words scribbled on a certificate with no real value?

Degrees of Futility

Vidya Varidh, who completed his Bachelor of Business Administration from a private college in Delhi, is now wondering if the three-year effort was worth it. “The course did not offer any real-life skills about how to start or run a business. They did not teach us how to register a company or the basics of sales and accounting. Soft skills like networking and community building were absent and teaching methods were obsolete. The emphasis was solely on passing the exam,” he says. Similarly, Ritu Chowdhary got her B.Com degree without attending any classes.

For people like Varidh and Chowdhary, job interviews are the real eye-openers. It’s a frustrating process for potential employers as well. Pune-based Ranjit Fanse (name changed), 30, who joined his father’s business of manufacturing auto parts for major car brands after completing his masters from Germany, is facing this challenge. “We are looking to hire young mechanical engineers. I interview so many young boys and girls. Most of them can’t even answer basic questions,” he says.

In an uncertain job market, students continue their studies, adding one degree after another. “They keep appearing in competitive exams in the hope of eventually getting a white-collar job. When they do, they drop out,” says Delhi University Teachers Union president V.N. Negi.

Former Union Minister of Human Resource Development Prakash Javadekar acknowledges the gap between employment and employability. “The National Education Policy 2020 [NEP 2020] has observed that the Indian education system is theory-heavy. There is a mismatch between curriculum and industry needs, limited practical exposure, faculty and infrastructure constraints and weak communication and soft skills,” he tells Outlook. Degrees offer academic credentials but do not always translate into employment. The result is a disconnect between what universities teach, what employers need and what young people expect from higher education.

Bindhy Wasini Pandey, director of the Centre for Himalayan Studies, Delhi University, learnt this the hard way when he was invited as an examiner. “All 40 students from a college in Haryana were collecting data for geographical mapping from a single village. While only one person made a handwritten report, others simply got it photocopied. What kind of jobs are these students expected to get?” he asks.

What makes the matter more worrisome is that even students who have passed out with costly B.Tech or M.B.A degrees are also facing challenges. India has built a vast market for tech and management degrees, but the quality of the education behind those credentials remains deeply uneven. While India has a number of excellent higher-educational institutions, the concern is the large gap between top-tier institutions and many colleges where students graduate without the skills employers need.

“Many times, graduates from these sub-standard tech and management colleges lack skills, technical knowledge and familiarity with the issues of the concerned industry making them unemployable,” says Arijit Bose, managing partner of Arc Talent Solutions.

The proliferation of engineering colleges in India, particularly from the late 1990s through the 2000s, was a defining feature of the country’s post-liberalisation education boom. For millions of families, an engineering degree came to represent more than a qualification: it was a ticket to economic mobility and a stable income.

But, today, thousands of engineering colleges in India are facing questions about the employability and economic value of their degrees. Several engineering institutions, particularly those struggling with admissions, infrastructure, faculty strength and placement records, have faced closures, reduced intake or approval withdrawals. Some management institutions have reported zero campus placements. As per reports, 58 engineering and technical colleges were granted progressive closure during the 2025–26 academic year. More than 950 technical courses were also discontinued during the period.

India, however, lacks a comprehensive national assessment of how many B.Tech and M.B.A colleges consistently deliver poor placements, low starting salaries and inadequate returns on students’ fees. In an era when the Indian workforce is facing an imminent threat, a lot needs to change in terms of policy making.

The Threat of AI

The heydays of yore are gone. The white-collar jobs that once formed the backbone of the Indian workforce are facing a threat from artificial intelligence (AI). Jobs built around routine cognitive tasks, information processing and entry-level knowledge work are especially vulnerable. Unlike earlier waves of automation that primarily affected factory workers, AI can now perform parts of the work traditionally done by graduates, analysts, accountants, customer-service executives, programmers and administrative staff. The biggest risk is not necessarily that AI will eliminate entire professions overnight, but that companies will need fewer people to perform the same amount of work. 

Take the IT sector, for instance. AI is reshaping the sector by changing how software is developed, how companies deliver services and how many workers they need for certain tasks. For India, where the IT industry has been a major source of graduate employment, the impact could be particularly significant. BPO, customer support, banking and financial services, graduate-level office jobs and digital marketing are some of the sectors that are likely to face the brunt of AI. These jobs won’t disappear, but the nature of entry-level work, hiring and career progression is changing. A NITI Aayog report estimates that in the service sector, AI could automate 40-50 per cent of white-collar roles, while demand for AI and big-data specialists could rise by more than 60 per cent. For customer-experience/BPO operations, it projected a possible decline in workforce from 2—2.5 million to about 1.8 million.

AI is also changing the way companies recruit fresh graduates. For India, where large numbers of young people enter the workforce every year, this could have significant consequences. The general trend of hiring has shifted from looking at skills like coding to behavioural and practical skills, says Mohi Shukla, a recruiter for a Fortune 500 MNC working in the field of AI.

Colleges can no longer prepare students only for jobs that exist today. They must prepare them for an AI world. The central shift must be from teaching students what to know to teaching them how to think and how to use AI.

“The current education curriculum needs to consider imparting real-life, practical points of view and thought improvement exercises rather than just bookish constructs,” says Shukla.

What students learn in college still matters. Fundamentals matter even more when an engineer has to judge whether an AI’s output is right. What has to change is where judgement gets built and who invests in building it, says Vidit Jain, senior vice-president and head of Scaler School of Technologies, a residential undergraduate institute focussed on computer science, AI and business. “We see the need for a skills passport: a verifiable record of credits earned and products built, which follows a student across colleges and employers. A degree tells a recruiter where a student studied. The passport shows what they can do on day one,” says Jain.

While the workforce is looking at forward-looking changes, there are certain culturally deep-rooted aspects that are hard to eradicate.

Hands Free

India has a paradoxical relationship with work: it aspires to become a global skills powerhouse, yet its social hierarchy continues to privilege degrees over skills and desk jobs over hands-on work. For millions of young Indians, a vocational career is not merely a job choice—it is a question of social status. A B.Sc graduate is quite likely to reject a technician or electrician’s job—and rather take up a low-paying clerical job.

As a result, employers often struggle to get people for low-skill jobs in manufacturing work. Fanse, the co-owner of the auto spare-parts-making factory in Pune, elaborates. “Welding is a crucial element in our factory. You will often find me on the factory floor. Freshers, however, hesitate to enter that zone. They think they are engineers and not welders,” he says.

The problem is culturally deep-rooted.

“Due to colonial and caste legacy, people in India prefer white-collar jobs instead of skilled manual labour,” says Singh, the BHU professor. For centuries, the caste system attached social status to certain occupations while associating others with lower social standing. This helped create a social order in which the dignity of work was often determined by who performed it, rather than by the value of the work itself. The consequences extend beyond caste discrimination. They can influence how families view vocational education, why some young people prefer white-collar jobs even when employment is scarce and why work involving the hands is sometimes seen as less prestigious than work involving a desk.

Experts point out that one reason India has not broken out of its cultural misgivings about working with hands is its missing the manufacturing bus.

On the other hand, factory jobs were critical to the economic trajectory of both the United States and China. In the US, the American Dream took root. It was built around the promise of a stable factory job—a job that could provide a regular income, a home, a car and a secure future for an entire family. From the 1940s through the 1970s, manufacturing jobs became a powerful symbol of upward mobility. For many workers, a high-school education and a job in an automobile plant, steel mill or other factory could offer a middle-class life without a college degree. Meanwhile, China used globalisation to build factories, expand exports and absorb millions of workers.

However, India just relied on the service boom. Although liberalisation unlocked growth, it did not produce a manufacturing revolution on the scale required by India’s labour market. The result was an economy that became globally competitive in software and business services without creating enough factory jobs for its vast workforce.

It is the absence of enough manufacturing jobs that is showing up in the unemployment numbers. The latest Periodic Labour Force Survey reports an unemployment rate of 14.8 per cent among 18–29-year-olds. In addition, there are 8.7 crore people aged between 15 and 29, accounting for 11 per cent of the population outside the labour force, that fall under the NEET category—they are not in education, employment or training.

As formal jobs become harder to secure, more people are turning to the gig economy as an alternative source of livelihood. From ride-hailing and food delivery to freelance work and online services, gig platforms are increasingly absorbing workers who might otherwise remain unemployed or underemployed. India’s growing gig economy may be as much a symptom of inadequate job creation as a sign of changing work preferences. With stable, salaried employment failing to keep pace with the expanding workforce, many are turning to platform-based work not out of choice, but out of necessity. The gig economy is providing livelihoods, but it also raises a critical question: is India creating better jobs, or simply finding new ways to absorb its unemployed?

Policy Gaps

When Narendra Modi became the prime minister for the third time in June 2024 defying anti-incumbency, there was optimism. As his election campaign was focused on youth, many were expecting the launch of a youth centric scheme. So, when the Prime Minister Internship Scheme was launched in October, the government received a pat on its back. The goal was to provide internship opportunities to one crore youth over the next five years. Around 1.5 lakh young people registered within hours of the portal going live. But nearly a year and a half later, the early momentum has largely dissipated, with data pointing to staggering underperformance, as per right to information queries. In the first round, only 3,995 candidates, roughly 3.1 per cent of the initial 1.27 lakh internship offered, saw the programme through to completion. Similarly, in the second round, more than half did not complete the programme.

This is not the only scheme that has not lived up to expectations. The NEP 2020 set a target that at least 50 per cent of learners in school and higher education should have exposure to vocational education by 2025. A recent NITI Aayog report notes that fewer than one in 12 secondary schools offer vocational subjects, indicating a significant gap between policy ambition and classroom access. India launched the Skill India Mission in 2015 to equip its workforce with industry-relevant skills. The Comptroller and Auditor General of India found significant implementation flaws in the Skill India programme. Low placement, training without proper assessment of job demand, delays in payments to certified candidates and financial and infrastructure irregularities were just some of the issues.

Unless practical, vocational and employability skills are integrated into classroom learning, no amount of policy makeovers or incentives can fix things in the long run.

Former education secretary Anil Swaroop stresses on the need for demand-based vocational education and skill training through industrial training institutes at district level to meet the local demand for employment. “A large number of plumbers, electricians, painters, potters and others are required at the district level while trained/skilled people are not available. People need to change their mindset towards manual labour and skill training needs to be imparted to meet these demands,” he tells Outlook.

India should take lessons from countries like China and Germany. China has expanded both university enrolment and technical education on a massive scale—currently, 4.4 crore students are enrolled in undergraduate, vocational and postgraduate higher-education programmes. Germany’s distinctive advantage is its dual vocational training model, which combines classroom instruction with workplace training. A 2025 data shows 89 per cent of German young adults with vocational upper-secondary or post-secondary non-tertiary qualifications were employed.

Manish Sabharwal, co-founder of staffing firm TeamLease Services, says: “India has treated education and employment as two separate systems. Germany built the bridge between them; India built two parallel roads and wondered why graduates couldn’t cross. Historically, India had only a few lakh apprentices compared with millions in Germany, Japan and China.”

“Three things must change. Regulation must make apprenticeships simple and portable. Employers need incentives because they bear the upfront training cost, but receive the productivity benefit later. And students and parents must stop seeing workplace learning as second-class education. Degree apprenticeships solve all three by combining a qualification with real work and income,” he adds.

Policymakers must take the cue and ramp up quality and quantity of diverse vocational training. While India is one of the biggest contributors of coders and nurses to the world, we could also do it for mechanics, welders and plumbers.

If India fails to equip its young graduates with the skills required to thrive in an AI-driven world, it risks facing a massive unemployment crisis over the next two decades. The challenge is no longer of creating graduates, but ensuring they possess the skills in a rapidly transforming economy. Otherwise, not only we will not get rich, we will get old and poor. The danger is imminent. If India produces millions of young people who possess degrees but lack economically valuable skills, its demographic dividend can become a demographic liability.

Annapurna Jha is a senior journalist