The “skills gap” has become a familiar concern in discussions on higher education and employability in India. Employers point to a shortage of job-ready graduates, while universities have responded by revising curricula, adding certifications, and increasing industry engagement. Yet despite these efforts, the gap persists.
The India Skills Report 2026 shows that even as employability scores across domains have improved, a significant share of graduates continue to fall short of employer expectations. The report notes that 77 per cent of employers find it difficult to fill roles in sectors such as IT, engineering, and healthcare.
This persistence suggests that the problem might be misdiagnosed.
The dominant view is that graduates lack the right skills because educational institutions are not teaching them effectively. But this overlooks a more fundamental issue: the gap between education and employment is not merely a failure of execution; it reflects a structural feature of how modern education systems are designed.
Also Read: Only 47% — Less than half of young Indians are employed, new study discovers
Where the gap exists
Formal education is built around the transmission of generalisable knowledge. Students learn principles, frameworks, and analytical tools that can be applied across contexts. What education cannot fully provide is exposure to the wide range of contextual challenges that shape real-world work. These environments are complex, dynamic, and often unpredictable. No curriculum, however well designed, can anticipate every situation a graduate will encounter.
This limitation is not unique to India; it is inherent to formal education. Debates around skills gaps recur in developed countries such as the United States, Germany, and Australia.
In pre-modern economies, including India, skills were acquired through apprenticeships within stable occupational systems. Individuals trained for years under practitioners, mastering specific tasks in relatively unchanging contexts. Learning and application were tightly coupled, leaving little room for a “skills gap.”
Modern economies operate differently. The rise of scientific knowledge and technological progress has expanded the range of solvable problems. Work itself has become fluid, with individuals changing employers frequently, within and across industries. Roles evolve, industries transform, and specific skills can become obsolete within a few years. In such an environment, it is neither feasible nor desirable to train individuals narrowly for fixed roles.
Education, therefore, now places greater emphasis on building portable capabilities—general problem-solving ability, scientific reasoning, and quantitative skills that remain relevant even as tools and domains change.
This emphasis inevitably creates a gap when readiness is measured at the point of entry into the workforce; however, over the long term, it enables greater adaptability and capability development across roles and contexts.
High expectations, low exposure
The more education focuses on generalisable knowledge, the less it can prepare individuals for the specific contexts in which that knowledge must be applied. The result is a predictable distance between what is learned and what is required in practice.
This mismatch varies across levels of education. At the undergraduate level, students typically enter at the age of 17-18 and graduate at 21-22, often with little exposure to real-world work environments. Employers expect to invest in training and onboarding. The distance between learning and application is therefore visible, but broadly accepted. Graduates are evaluated more on their potential to learn than on their immediate ability to perform.
At the postgraduate level, particularly in management education, the dynamics change, though not dramatically in India, which remains largely a pre-experience MBA market. Students are slightly older, and only a minority has prior work experience. Employers, however, expect quicker contributions, especially in roles involving analysis, decision-making, and execution. Yet exposure to real-world contexts remains limited to one or two years.
This creates an asymmetry. While exposure increases only marginally, expectations rise significantly, reinforced in part by the higher compensation associated with postgraduate roles. The result is a subtler but more consequential mismatch, often interpreted as a lack of readiness rather than a natural stage in capability development.
This difference also explains variation across roles. A civil engineering graduate from IIT may perform well in a quantitative finance role because both rely heavily on analytical foundations. In contrast, roles requiring judgement under uncertainty, stakeholder management, and context-sensitive decision-making expose the limits of classroom learning more clearly.
How capability develops
The issue is not merely one of “skills,” but of how capability develops over time.
Capability evolves across three layers. At the foundation are general cognitive skills: problem-solving, analytical thinking, and quantitative reasoning. Built on this foundation are subject-specific frameworks that structure decisions. At the top sits industry context: the ability to apply these frameworks effectively within specific organisational and market environments.
Educational institutions are well-equipped to build the first two layers. The third emerges primarily through experience and over time.
Seen this way, the skills gap is not a deficiency to be eliminated, but a capability development process to be managed.
Much of the current response has focused on expanding content: more courses, more specialisations, more certifications. While these may increase exposure, they do not address the underlying constraint—the impossibility of replicating real-world complexity within a classroom.
As a result, students optimise for what is measured during their academic journey—grades, assignments, and credentials—while employers evaluate them based on performance in context-rich environments. This mismatch creates frustration on both sides.
The expectation that graduates should “hit the ground running” exacerbates the problem. It assumes that readiness for complex roles can be achieved entirely through formal education by the early to mid-twenties. In reality, readiness is not a fixed state but an evolving capability, developed over time through repeated engagement with real-world challenges.
Productivity needs investment and time
If the gap between learning and application is unavoidable, the relevant question is not how to eliminate it, but how to manage it more effectively.
For industry, this implies rethinking the role of hiring. Recruitment is often treated as a selection exercise aimed at identifying candidates who are immediately deployable. Given the structural limits of education, firms may need to treat hiring as the starting point of a development process rather than its culmination. Structured onboarding, mentorship, and early exposure to real problems can accelerate the transition from academic knowledge to practical competence.
For educational institutions, the objective should not be to replicate multiple industry contexts within the classroom, but to create sustained opportunities for engagement with real-world environments. Project-based learning, internships, and problem-driven assignments can enable students to apply concepts in less controlled settings.
In this context, the National Education Policy 2020 provision for hiring Professors of Practice offers a practical mechanism to bring real-world perspectives into teaching, though its adoption remains limited. Crucially, these experiences must be iterative rather than episodic. Capability develops through repeated cycles of application, feedback, and adjustment—not through one-time exposure.
At a broader level, expectations need recalibration. Students often equate academic success with employability, while employers expect immediate productivity. Policymakers seek to align education with industry needs through curriculum mandates. These perspectives, while individually rational, collectively reinforce the flawed assumption that education can substitute for experience.
A more realistic approach would distinguish between foundational capability and applied competence. Educational institutions can—and should—provide the former; the latter emerges over time through practice.
The challenge, therefore, is not to eliminate this difference, but to design systems—within both education and industry—that enable individuals to bridge it more effectively, and more quickly.
Rajesh Gaurav is a Professor of Practice at Mahindra University School of Management. S. Ramakrishna Velamuri was the Founding Dean at Mahindra University School of Management and is currently a Visiting Professor at leading business schools in India and abroad. Views are personal.
(Edited by Asavari Singh)