Tuesday, March 21, 2017

Why Can't Indian Engineers Find A Job And What To Do About It?

We knew this anecdotally: That Engineering graduates can not find a job in India. Now, we have some numbers: AICTE says that 60% of the 800,000 engineering graduates every year remain unemployed. (see story)

The story above gives out some important data points: 

1. That only 15% of the programmes are accredited by the National Board of Accreditation. This means 85% of the Engineering Programmes have no effective quality control.

2. That only 1% of the Engineering Graduates participate in a summer internship. This effectively means that while, in theory, an internship is a part of the programme, in practise most Engineering graduates never participate in one.

Of course, one can read more in this data. The fact that programmes are not accredited means many colleges may be offering a degree without having proper laboratory infrastructure. In a sense, it is some sort of miracle - indicating strong demand - that 40% of the graduates actually find a job, because most would not have touched an equipment or stepped into a workfloor, ever.

In another sense, it is a tragedy. The government may be thinking of a National Entrance Examination for Engineering, but most, if not all, Engineering students go through some sort of entrance examination. Obviously, some of these entrance examinations are not worth anything, but the fact that they come through some sort of screening makes employers prefer Engineering graduates over graduates of other streams. This means two things. First, that tests mean more than the education itself. Second, the Engineering unemployment rate indicates an even worse scenario for about 1.2 million graduates of other streams every year.

Further, we should be expecting a slowdown in job growth rates in IT and IT Services industries in India. The cost competition is one reason, and many Indian IT firms have already started expanding into other lower cost locations, such as the Philippines and Africa. Besides, the visa reforms in United States and other countries may jeopardise the business models of India-based IT firms. But the biggest threat of all is automation, where bots and robots may soon start doing a lot of things that was done by a human agent, sitting in India, so far. This is very real: Some estimates put 70% of Indian jobs at risk; others expect this to stop the job numbers from growing. (See story)

Whether or not this turns out to be correct, one can clearly see that the salaries have already stagnated. TV Mohandas Pai, an Education business leader, acutely aware of the threat of automation, recently claimed that the Indian IT firms are colluding to keep the wages down for engineering graduates. (see story) There may be some truth in collusion, but it also shows that the business models that allowed these IT firms to grow exponentially are now in the need of repair.

And, indeed, there is another problem: Indian Higher Education is out of step with the Indian job market. The engineers got the fancy jobs in the 1990s, and therefore, the whole ecosystem emerged. But since the Great Recession of 2008, Indian economy was powered by its own consumer demand, particularly as successive governments boosted rural demand through fiscal interventions. The jobs that this creates - in Education, Retail, Banking and Insurance, Health and Telecom - are less attractive, and often comes with the prospect of living in small cities rather than in the United States. Consequently, more and more people continues to be drawn to Engineering and Western-style business courses, whereas the growing service sectors get scarce attention and only second-grade talent. 

There is no one solution to this big problem, but more of the same is not the answer. The government stepping in and instituting new tests will solve nothing: Indeed, as AICTE itself is arguing, its oversight for so many years have failed to create a system that works. Half a million unemployed engineers every year is a ticking time bomb, and blaming them for their own failure - coupled with the very Indian propensity to blame the stars - can keep things going for some time, but not forever. However, the sector is anti-innovation, primarily because the owners of Engineering colleges represent a powerful vested interest, and despite their failure, the Government can not take them on and open up the sector. However, a gigantic crisis is around the corner - and hopefully, some people will wake up before the others and do something about it.

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