'Skills Required In A Graduate Are Undergoing Changes'

'Today's engineering graduates have to learn the skills to solve problems which is actually a higher order skill.'

A recent report on the hiring of fresh engineering graduates has come as a rude shock to those who are passing out of colleges this year; that 2024 saw the worst hiring in 20 years!

Are we seeing a repeat of the 2008 meltdown?

Will the current situation go back to what it was a few years ago when India's IT majors recruited fresh graduates from colleges in their thousands?

What has changed now?

Aditya Narayan Mishra, managing director and CEO, CIEL HR Services, explains the employment scenario.

"When it comes to hiring, companies have to commit a long-term plan to their employees because it is a full time hiring. When they do not have long-term clarity on their projects, they are not confident about hiring," Aditya Narayan Mishra tells Rediff.com's Shobha Warrier in the first of a two-part interview.

Reports say hiring of fresh graduates by major IT companies is a 20-year low. What do you think is the reason?

There is a combination of factors that are playing right now.

Let me talk about start-ups first. The global headwinds are impacting investment in the tech-enabled businesses in India which is the entire start up ecosystem.

Today, they are not getting adequate investment. As a result, they have put hiring on the back burner.

Next is the IT Services companies like Infosys, Tech Mahindra, TCS, Wipro, etc. Two things have happened to them.

One: The automation wave that has gripped the entire world has affected the IT Services companies. The way software is built, the way software is tested, and the way software projects are run have undergone tremendous change due to automation tools.

Hence, the number of people required to do the job has come down drastically.

The other big reason for the IT Services companies to go slow is, because the global environment is not favourable right now with the US elections around the corner, a large number of developed economies are doing badly.

Two big wars are going on.

Then there are challenges even in the global transportation sector, like the Red Sea shipping crisis.

Hence, we see that many large companies are quite tentative in their long-term thinking. They prefer to focus on their short-term objectives.

As a result, the projects that are coming to our IT Services companies are very short-term in nature.

When it comes to hiring, companies have to commit a long-term plan to their employees because it is a full time hiring. When they do not have long-term clarity on their projects, they are not confident about hiring.

These are the reasons why IT Services companies have reduced their hiring.

Then comes the IT Products companies. You talk about all the major IT product companies like Cisco, Microsoft, Apple, Meta, Google, etc., they are all global companies and not Indian companies.

And today, the global strategy is to optimise the cost so that they continue to have the same profitability. Since their profits are under pressure, India does not get headcount approval.

The big difference between the Services companies and the Product companies is that when you hire an engineer in a Product company, the time you require to make the resource productive is fairly long unlike in the Services company.

When they are trying squeeze profit out of a product, they are always on a tentative footing. As a result, they have reduced hiring.

Because these companies have large presence here, India is getting impacted.

It is said that the cost-advantage companies had once, is no longer there in India. Are these companies looking at other countries?

It is not that they are shifting jobs from India to say, the Philippines or Ukraine.

Regrading cost, yes, India was providing a cost advantage, but it has reduced over a period of time. The cost in India also increased every year by 5% to 7% while globally the cost increased by 2% to 3%.

Does that mean India will become unattractive for them when they no longer have the cost advantage?

There will be some corrections as we go forward. It is not going to happen in the next 2 to 3 years. Maybe after 15 to 20 years.

So, it is a very bad scenario as far as hiring is concerned?

I would say, there are some positives too.

The businesses that are in India like the FMCG companies, retail companies, hospitality and manufacturing companies are investing in IT and giving some jobs to the IT Services companies.

This has resulted in some positive hiring.

But the result of the negatives is so large that the positives are getting outnumbered.

My estimate is that the demand for IT professionals for domestic companies has gone up by 20%. It doesn't mean the headcount has increased by 20%.

And international demand has gone down by 30% which is a huge segment that contributes to the revenue of a Services company.

So, hiring has gone down tremendously.

In fact, their net addition has become negative as they are okay to lose people than add.

IMAGE: Aditya Narayan Mishra. Photograph: Kind courtesy Aditya Narayan Mishra

Is the hiring situation as bad as what we had witnessed in 2008 due to the global meltdown?

It is similar (to 2008) because of two reasons.

One: The number of graduates India was producing in 2008 and now in 2014 is very different. The number has increased significantly.

The impact may not be exactly like 2008 but because of the sheer increase in the number, it can be hard. In some places, almost half the number of graduates are not getting any opportunities.

Because of Gen (Generative) AI automation, a lot of those repetitive jobs are done by AI easily today. A company that required 100 IT people earlier can do the same job with 80 people.

And the skills that are required in a graduate also is undergoing a lot of changes.

Earlier companies wanted people to have a certain knowledge of coding to develop a software in a particular computer language. Today, AI tools are able to write the programme provided the engineers are able to explain the situation properly.

So, a new field called prompt engineering has developed where the engineer is expected to prompt the AI tool to write the code.

Hence the skills shifted from software development to problem solving and communicating to an AI tool.

So, today's engineering graduates have to learn the skills to solve problems which is actually a higher order skill.

Earlier the problems solving was done by the senior people but now, the younger people have to write the specifications to spot the problem and solve it so that the machine can write it.

Feature Presentation: Ashish Narsale/Rediff.com