As the Narendra Modi government struggles with rising unemployment, the Indian IT sector too is facing a severe jobs crisis — about 60 per cent of the eight lakh engineering graduates every year remain jobless.
This should be a concern for a $170 billion industry that boasts of contributing eight per cent to India’s gross domestic product (GDP) — with an expected growth rate of nine per cent even under the current state of a sluggish economy — and has been the chief contributor towards the social mobility of millions into the middle class.
Several factors are working in tandem to drastically decrease the job and wage prospects in this sector, creating a scenario where even a state like Kerala, which has the highest literacy rate in the country, finds itself in a position where 25 per cent of its engineering graduates are unemployed, and 66 per cent are engaged in non-technical jobs with wages less than that of manual labourers.
The biggest factor is the emergence of cutting-edge technologies like artificial intelligence and automation, which increase productivity to levels that seemed unimaginable a decade ago. Integration of these technologies will progressively decrease human capital requirements.
Along with dwindling technical employment openings, India faces another challenge — technically inept workforce. An employability assessment study conducted last year had found that 94 per cent of our engineering graduates are unfit to be hired for software development jobs, further highlighting the deep-rooted issues in our current technical educational system.
The Kerala Model
Kerala, despite its current high unemployment levels and low wages for its technical graduates, has a model, which, if fine-tuned over a period of time, could greatly improve the unemployment crisis in the IT sector.
Kerala was one of the pioneers in taking the initiative to impart technical education to the students at the school level, when a basic programme, IT@School, was launched in 2002. The programme has since expanded into a system that aims to foster a combination of technical as well as entrepreneurial skill-sets among the students from an early age.
The state has tied up with the UK-based Raspberry Pi Foundation, and has distributed thousands of credit card sized single board computers called ‘RasPis’ to the students in various government-run schools, and has set up a structured programme to train these students in basic coding skills. A statewide competition is conducted and students who complete the programme are rewarded with cash prize.
Another programme called Electronics@School focuses on Class 9 and 10 students. They are given ‘circuit builder’ kits that enables them to learn the practical nuances of electronics in an intuitive manner.
As of now, over 2,500 schools across the state have participated in both these programmes, and over 25,000 students have been trained on coding, and electronics-related technical skills.
The process of imparting technical skills and encouraging entrepreneurial activities continues in the higher educational institutions, with 226 of the various engineering, polytechnic, arts and science colleges in the state taking part in them. Mini-startup incubators, called Innovation and Entrepreneurship Development Centres (IEDCs), have been set up in each of these institutions to provide technical, entrepreneurial support and training. Over 50,000 students have participated so far.
Building a strong foundation
Through these programmes that begin at the school level, the state is creating a strong foundation of skilled technical workforce. The IEDCs have also led to the production of over 300 technology startups, constituting 20 per cent of Kerala’s total number of startups that employ thousands of people, as per the Kerala Startup Ecosystem Report 2018.
While AI and automation drastically cut down the jobs in the conventional IT sector, technological firms working in these areas can increase their focus on research and development (R&D), and make a concerted effort to shift from the services sector and create higher value products. They could then see new growth opportunities, and create fresh, higher-skilled technical employment opportunities. Remarkably, 40 % of the startups working in Kerala are product focused, with many of them working in areas as diverse and advanced as fin-tech, robotics, and blockchain.
The vibrant Kerala startup ecosystem, however, still stands on shaky pillars. Any startup would have to raise capital at regular intervals until it becomes self-sufficient and starts generating profits. A vast majority of startups in Kerala still incur operational losses. Only 59 of the 1,500 startups functioning out of Kerala have managed to raise institutional capital.
The unfunded startups work in a bootstrapping model, and they can ill afford to pay competitive wages. This explains the huge number of technical graduates getting meagre wages. An economic downturn, or the sustained inability to raise capital, can shut down any of these startups.
Nonetheless, a small market state like Kerala, with limited exposure to mainstream avenues of institutional capital, has created a competitive technology startup ecosystem and a premium technical workforce. This is a commendable accomplishment, which was attained by a combination of adroit policy making, and by bringing in structural changes in the state’s technical education system.
In order to even have a shot at mitigating our employment crisis, it is imperative that we set aside our much-publicised belief that growth would automatically lead to more jobs, as this perception is contradicted by the current employment trends. Instead, policies across core sectors that focus primarily on job creation should be created.
At the same time, it should be equally important to train our young population with suitable technical skills so that they are best prepared to leverage on the new opportunities that will open up with these policy changes. This would require an overhaul of our existing technical educational system.
Anil K. Antony is the Vice President of Navoothan Foundation and convener of INC Kerala Digital Media Cell.
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