New Delhi: Last week, a 20-something student from Indian Institute Of Management (IIM) Kozhikode prepared nervously for his fourth round of interviews during an ongoing campus placement drive. The job market is more difficult this year owing to global macroeconomic headwinds, and it’s freshers like him who appear to be feeling the brunt of it.
“It’s a tough situation this year,” said the student who wished to not be named. “There are not that many jobs in the market. Only some consultancy and IT companies are coming for recruitment. There’s also a delay in the campus placement drive. Companies aren’t interested in hiring freshers.”
“The alumni are our last resort,” he added.
Last week, Birla Institute of Technology and Science, Pilani (BITS Pilani), made headlines after its management reached its vast alumni network in an attempt to enlist its help for campus recruitment.
“The global economy has not experienced this kind of slump since decades. The technology sector is radically impacted, with around 4 lakh employees being laid off globally since January 2022. This global uncertainty has a cascading effect with a funding winter setting in, resulting in cost-cutting in small and large businesses alike, with hiring being affected at all levels, including the campus level (sic),” the letter said.
First IIM Lucknow, now BITS Pilani asking alumni to help out with placements.
This is the first time I am seeing such groveling after 2008.
"help them tide through current crisis"
"gentle request to please keep this in mind"
"Thanking you very much in advance" pic.twitter.com/TI27X7THk6
— Ravi Handa (@ravihanda) February 22, 2024
This was the second such appeal from a major institute in a month. In January, the Indian Institute of Management (Lucknow) made a similar plea to its network of ex-students. The appeal, sent through WhatsApp, came after 72 of its students failed to get jobs this placement season.
These come at a time when two of the world’s biggest economies — Japan and the UK — have fallen into recession. The effects of these global headwinds, being felt for some time now, have also affected India. According to an IANS report in December, India’s tech companies laid off over 36,000 employees over the past two years.
These layoffs follow a similar global trend. After over 4,25,000 jobs vanished worldwide over the Past two years, tech executives blamed it on pandemic overhiring, high inflation & weak consumer demand.
A result of these global macroeconomic factors, according to experts, is lower hiring and reduced pay, even in India’s elite institutions such as BITS Pilani and the various Indian Institutes of Technology (IITs) and the IIMs.
“There is a fall in companies hiring this year and they offer lower salaries. The industry is in recession as they overhired people during the pandemic and they think it’s better to not hire more,” a placement cell member from BITS Pilani’s Hyderabad campus told ThePrint on condition of anonymity.
On its part, the institution has claimed that its letter has been “blown out of proportion”.
“It should be a very normal thing for institutions such as BITS and IITs to reach out to alumni for placements. I had done this even in my earlier role as Director, IIT Delhi. This is needed even to improve placement opportunities for students,” V. Ramgopal Rao, group vice-chancellor of BITS Pilani campuses, said in a long post on X, adding that over 7,400 alumni are in “CEO and other senior positions in corporates across the world”.
A clarification on BITS Pilani Dean to our alumni seeking help for Placements.
An email from @bitspilaniindia Dean (Alumni) seeking help from alumni for placements is being blown out of proportions. It should be a very normal thing for institutions such as BITS and IITs to… pic.twitter.com/kRcjv8iVFZ
— V. Ramgopal Rao, Ph.D. (@ramgopal_rao) February 25, 2024
Experts see the decline in recruitment as a natural result of global headwinds.
“There is a recession in the US and UK markets, which has also impacted India. IT companies get fewer orders from them, so they recruit fewer people and lay off employees. It has also impacted stocks of IT companies,” Sharad Kohli, a financial expert and founder of infrastructure company KCC Group, told ThePrint. He added that this was “just an aberration in the job market” and will be short-lived.
Experts also believe that this drop in hiring, while sharp, is not unexpected.
“It’s a delayed effect of a more gradual post-pandemic slowdown in global demand for tech services and outsourcing,” Prasanto K. Roy, a public policy adviser and technology writer, said. “In hindsight, tech firms may have over-hired during the pandemic and just afterward. But the fact that we haven’t seen mass layoffs (and the industry has been a net hirer) means that companies did hire for what they needed and what they projected at the time.”
Companies eventually realised that those projections did not match reality, he added.
Change in global order
According to experts, new hiring has been sluggish in the past two fiscals. In an article published on the website of NASSCOM — a non-governmental tech trade association and advocacy group — Nanu Pany, founder and CEO of the Bhubaneswar-based CSM Tech, said that India’s IT companies Tata Consultancy Services (TCS), Infosys, and HCL Tech, have seen their employee numbers falling in July-September quarter last year “as they reported lukewarm results”.
“Over the past two fiscal years, Infosys has added over 83,000 employees, while TCS has added over 120,000, and HCL has added about 57,000. By contrast, Infosys has seen its net employee headcount decline by 14,470 and HCL Tech’s by about 4,800 during the June-September period of 2023-24. TCS’ net employee reduction stood at 5,810 in the same period. One report estimates the headcount at TCS, Infosys, and HCL Tech nosediving by 50,000 in this fiscal as global challenges amplify for technology services after the Hamas-Israel conflict,” the article, published last December, said.
Likewise, recruitment of new engineering graduates has also been poor. According to a report in Economic Times, published on 1 February, IT companies would have hired 70,000 and 80,000 new engineers, “the lowest intake in over two decades”.
Data from the Employees’ Provident Fund Organisation (EPFO) — the government agency responsible for the regulation and management of provident funds in India — also shows that 10 percent fewer formal jobs were created in 2023 as compared to 2022.
Indeed, this shows on the ground. According to Balasubramanian Gurumurthy, Chief Placement Officer at BITS Pilani, as of mid-February, the institute has seen an 18 percent drop in recruiters.
Typically, placement drives in most tech and management institutions are conducted in December, spilling into January when necessary. However, according to Gurumurthy, the placement season has been extended this year after 60 percent of eligible students were placed in the first phase of the drive.
He also admitted to ThePrint that this year’s placements needed “extra efforts”.
“The macroeconomic environment (has) changed, with companies today feeling the heat from their investors to tend to profitability rather than expansion. This caused companies to try and reduce manpower costs, resulting in layoffs, salary reductions, and offer revokes which are hitting the news every day,” he said, adding that the challenges are likely to continue in the 2023-24 placement cycle.
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Fewer jobs at IITs, IIMs
It’s not just BITS Pilani that’s facing issues during campus placements. According to a source in IIT Delhi’s Department of Management Studies, the uncertain job conditions have also affected the placement of management students.
“We saw a limited number of companies coming from the IT/ITES (information technology and information technology enabled services) and consulting sectors. Our average number of offers per student fell 16 percent this year. Pre-placement offers were also much fewer than normal,” she said.
Like BITS Pilani, the placement season at IIT, too, has been extended.
Meanwhile, IIM-Lucknow’s appeal to its alumni worked, with the institution recording 100 percent placement this year. According to placement in-charge Ram Baran, the process was challenging this year. “This year placements are delayed because many companies were not interested in hiring,” he said.
According to various placement cells, internship opportunities have also been fewer this year. “There is an atmosphere of uncertainty among the students,” a placement coordinator at IIT Delhi said.
According to experts, market dynamics have changed post-pandemic. A major reason for this is automation and the increased use of Artificial Intelligence.
“Every time a new technology comes, it disrupts the market,” IIT Delhi’s Alumni Association’s secretary Pankaj Kapadia said.
Another significant reason is a change in the outlook of recruiters. According to experts, recruiters are demanding more skills from their potential candidates — a survey by the networking platform LinkedIn last month showed that AI is prompting 94 percent of Indian companies to upskill their employees.
Arvind Jha, an alumnus of IIT Kharagpur and ex-senior vice-president of US-based tech company Newgen Software, believes there are four main reasons for the downturn in the job market.
“First, corporates invested lots during COVID and they are waiting to balance out that investment. Second, automation in tech companies causes shrinking jobs. Third, especially in India, start-ups lay off employees and do not hire much, and fourth, quality of workers is still a big challenge for companies,” Jha, founder of the Mithila Angel Network — an angel investor network that aims at creating a startup environment in Bihar’s Mithila region — told ThePrint.
However, some experts believe that this market downturn isn’t limited to the organised sector and has also affected India’s unorganised sector, where over 90 percent of India’s workforce is currently employed.
“Between demonetisation (in 2016) and Covid, this sector was hit and could not recover,” economist Arun Kumar told ThePrint. “Recovery was seen only in the organised sector. (But) the government is (still) ignoring the unorganised sector.”
‘Grim situation’ in tier-2 and tier-3 cities
Despite the challenges faced by elite institutions such as IITs and IIMs, what’s most concerning to experts is how the market downturn could affect lesser-known institutions.
India has over 3,000 engineering colleges and 4,000 management institutes, many of these in India’s tier-2 and tier-3 cities.
According to Prasanto Roy, while elite institutions could manage with their alumni’s support, “it’s worrying because it points to a grim situation in second- or third-tier schools where placements would be way lower without the safety net of influential alumni networks”.
Indeed, India’s lesser-known institutions have been feeling the effects of the deepening job crisis. According to Sunil Jankar, the placement cell head of Navi Mumbai’s Saraswati College of Engineering, recruitments are not only comparatively lower this year but companies are also more careful in their selection.
“Companies that have come this year have higher expectations from students and have raised the bar for the test. Previously, students had several offer letters to choose from but now it’s not like that,” he said.
Renu Dua, a professor in charge of placements at Gurugram’s Dronacharya College of Engineering, agrees. Only 70 percent of the college’s students eligible for placements this year have got jobs as compared to 90 percent the year before, she said.
“This time, companies are not hiring in bulk. They are demanding extraordinary skills,” she said.
For students, this means more uncertainty. For instance, one final-year engineering student from Jaypee Institute of Technology was informed of the difficult market situation during a placement briefing in the college auditorium.
“Even the companies that came to the college for hiring were sales companies. Hardly any tech companies are coming for placements and those that do hire very few students,” he said.
(Edited by Uttara Ramaswamy)
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