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Last Updated : Jul 04, 2019 11:54 AM IST | Source: Moneycontrol.com

Job Series (Part 3): Freshers' salary in IT sector stagnant for 7 years

Based on a survey by IT staffing firm Teamlease services, job estimate for freshers for FY2020 is 1.95 lakh across eight tier I cities and 19 sectors. In the space of IT/ITeS, BPO and e-commerce and tech startups, estimated job creation is close to 30,000.

As NDA 2 gears up for its first Union Budget, all eyes will be on first-time Finance Minister Nirmala Sitharaman. She has her plate full, laden with issues like farmer distress, sluggish investment cycle, flagging exports, among others. But, on top of the heap will be the issue of jobs and the lack of employment opportunities for India's burgeoning young population.

The problem is not merely about enough jobs not being created. In some of the industries, the crisis is also due to a sluggish response to structural changes, leaving many jobless.

In a four-part series, Moneycontrol looks at how some of the major sectors of the Indian economy are faring.


Is it a good time to be a techie for a fresh graduate? The answer would be yes if one goes by the employment outlook reports and companies that are bullish on the growth.

Based on a survey by IT staffing firm Teamlease services, job estimate for freshers for FY2020 is 1.95 lakh across eight tier I cities and 19 sectors. In the space of IT/ITeS, BPO and e-commerce and tech startups, the estimated job creation is close to 30,000. Major IT companies are likely to hire between 70,000 to a lakh graduates, going by the figures for FY18.

Great prospects, it would seem.

But, looking beyond the outlook reports and company’s announcements, the employment landscape is lot more complicated. The industry has more graduates than needed. And, most of them come with subpar or no skills as the need of a fast-moving industry keeps changing.

Demand vs Supply

A 2017-18 Ministry of Human Resources and Development report revealed that around 10 lakh students had passed out of engineering colleges that year.

Comparing the number of students who pass-out versus the total jobs available, it would mean that a major chunk of the graduates will not have opportunities that is deserving of their education.

Experts have pointed out that most of these unemployed students are likely to be from rural or semi-urban centres, who lack communication and technical skills.

Recruitment by IT firms are important, given that these companies recruit from all streams including mechanical, civil and electrical engineering. Any drop in their recruitment will have an impact on overall engineering placements.

According to Ajay Shah, Head - Recruitment Services - TeamLease Services, apart from quality education and access to resources, graduates from tier I cities are more likely to be chosen by firms since their communication skills are better.

Soft skills, as per Shah, becomes important in campus hiring.

Take Valliappan Murugan* for instance. Murugan studied in a college in textile town Tirupur in Tamil Nadu. For final year students, one university in Tirupur hosts placements for surrounding half a dozen engineering colleges.

“So, each college will send five or six people from each department to the hosting university. These students were chosen based on their aptitude and soft skills,” Murugan explained. The remaining 50 odd students in each department do not even get to attend the placement. Each college has at least seven departments.

Luckily, Murugan was one of the five students selected and even luckier to have gotten a job in a small app-developing firm, with a starting salary of Rs 15,000. This was three years ago.

“At least I got a job. Even after three years, most of my batch-mates are still unemployed or are working as delivery boys in my town,” he added.

One such person is Singaram P*, who is a delivery boy in Tirupur and Murugan's classmate. After passing out, Singaram sat through several job interviews for two years without any success.

Rather than trying for another year, he became a delivery boy for a food delivery platform. Singaram earns Rs 10,000 in a month on an average, just enough to take care of his needs. He is also looking for better jobs at the same time. Given his lack of communication skills, they are hard to come by.

Arivu Selvan*, an electrical and electronics engineer, always wanted to work in posh IT companies. His parents, employees in a garment factory, pledged their savings to fund his education. Three years after graduation, he is still unemployed.

“I studied in a government school from rural Tamil Nadu. English has never been my strong subject. My college scores are not bad but likely not up to mark. That is what I understand from interviews I have attended so far. But, our family cannot afford coaching classes,” he said.

But, instead of becoming a delivery boy like his friends or joining a textile hub like his parents, Selvan wants to try again for a year before he gives up.

The story of Singaram and Selvan reflects the plight of the majority of engineering graduates in the country, who are either jobless or have become drivers or delivery boys to make ends meet.

According to Pravin Agarwala, CEO - BetterPlace, a digital platform for management of blue-collar workforce, close to 10-15 percent of the workforce that are entering in the gig economy are graduates, both engineering and other streams.

Though the company did not have a specific number of engineers joining the gig economy, the numbers are on the rise since their degrees are not good enough to get them jobs.

For people like Singaram, these jobs offer more flexibility that allows one to equip themselves till they find a better job. “Well, the money I make might not be good enough. But, it is on par with people who are working for BPOs or manufacturing companies and earning only Rs 8,000 per month,” Singaram adds.

Stagnant salaries

This is another problem for entry-level jobs. Kris Lakshmikanth, founder and MD - Head Hunters India, said, “The salary for entry level freshers has been stagnant for at least seven years now.”

Take Chandran Subbu* and Anandi N*. Subbu is a 2019 engineering graduate from a reputed college in Chennai and Anandi is a 2010 graduate from another reputed college in Tamil Nadu. Both were selected through campus recruitment in a major IT company. Both were offered an annual package of Rs 3.25 and 3.5 lakh respectively, a difference of barely Rs 25,000.

“The stagnation has more to do with the over-supply of engineers and the lack of skilled talents that are in huge demand now,” Lakshmikanth added.

At the same time, freshers who are skilled in the latest technology such as cloud, artificial intelligence or machine learning can earn up to Rs 6.5 to Rs 8 lakh per year.

Supaul Chanda, Business Head - Teamlease digital, says there is a huge gap between what is taught in colleges and what is actually needed in the industry. With technology changing so fast, the curriculum at the majority of engineering colleges does not reflect those changes. This is becoming an issue now, given that the employer’s expectation is changing.

“We are grossly lagging behind,” Chanda said. “If this continues, companies will go elsewhere instead of India,” he added.

What can be done? Colleges should tweak their curriculum to introduce short term programmes on new age technologies. This way, graduates will be more relevant and improve their chances of employment, another expert said.

“Some colleges have partnered with companies to offer such courses. But, it is not mainsteam yet, and the numbers are still small. More colleges need to adopt and align themselves to the changing needs,” the expert added.

*names changed to protect identity

Yesterday's story talked about the uncertain future insurance agents are facing. Tomorrow's story will look at how some of the pharma companies have managed to overcome HR issues by taking proactive steps. 
First Published on Jul 3, 2019 10:55 am