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A Shift in Paradigm for Engineering Jobs
Tue, 30 Aug Pre-Open

Can the Indian government provide jobs to India's young? This is something we wrote few days back in one of our editions of The 5 Minute WrapUp. Here's a snip, in case you missed it:

The idea is that the government needs to focus on building capabilities as a large portion of the country's population is expected to be below 25 years of age by 2020. This is the so-called 'demographic dividend' that is constantly bandied about as positive for India. But is it really that simple? Because you see, growth in youth population is quite meaningless unless it is followed by job creation as well. This means that it is important to equip young Indians with the requisite skills and educational standards. Only then will their chances of gaining employment rise.

The moot idea was that demographic dividend will benefit India only if the government is able to create the right environment for job creation.

Now, we all know that the penetration of automation and various technologies has displaced many jobs in India. And we have also heard a lot that this trend is set to grow in the coming future; thereby making the issue of unemployment worse than before. But let us keep this troubles aside for a while. Let us assume that the threat from automation will never pan out. Will Indians be better off then? Yes, they might be. But there will also be many concerns hanging around at the same time.

This we say because there are many developments going on in the hiring space. And most exposed are engineering jobs. We came across an article in the Economic Times which states that engineers applying to small and medium businesses or start-ups could be in for a disappointment. This comes as many of these firms have made up their mind to hire only diploma holders.

The reason behind this, as per these above businesses, is that engineers often quit when they get an offer from bigger brands. This in turn leads to higher attrition rate and more spending on hiring and training new recruits.

And there's a solution these businesses have found out for this issue. They now hire diploma holders instead of engineers. By doing so they aim to train and retain them for longer periods. So the paradigm here has been shifted from engineers to diploma holders.

The article states that IT services firms have reduced net hiring by as much as 30% anticipating this shift. Further, the total hiring in 2016-17 by IT firms is expected to be either flat or lower than the 2,00,000 people firms hired last year. In 2014-15, these companies hired 2,30,000 employees.

The above shift will bring in productivity for small and medium businesses and startups. However, at the same time, it spells a sure sign of trouble. This we say because there are many job seekers out there who want an engineering degree that gets them a job in these firms. Going by the data, the number of engineering seats exploded from around 5 lakh in 2005-2006, to 10 lakh in 2009-2010 and to more than 15 lakh, currently. In fact, as the government recently told the Lok Sabha, overall there is surplus capacity in the engineering sector with 8,44,328 seats remaining vacant in 2014-15. Vivek Kaul, editor of Vivek Kaul's Diary, has explained this issue in detail in one of his articles.

And the trouble doesn't end here. Poor education system in India coupled with the corruption amplifies this risk. These factors lie behind India's incapability to generate enough decent jobs for a bulging workforce.

So the above trend is just another brick in the wall for India's sorry state of unemployment. The only solution to this is the demographic dividend of India being well equipped. There should be a deeper sync between academia and industry.

If the problem continues on this front, there will be no demographic dividend for India. And this could create problems of another kind for the country and even derail its growth story.

Apart from the above, there still remain many concerns that pose a threat to the Indian economy. Vivek Kaul has spotted a trend he thinks has the potential to derail India's long-term growth story. He's of the view that there are many macro trends that could directly impact the economy and in turn you. These are the big issues like the government's handling of oil prices, India's disastrous jobs situation, the current state of India's real estate bubble, rising bad loans at the PSUs...and a lot more!

In fact, as you read this, Vivek has just come out with a full note that details all...including how this trend could impact you.

Click here to know more.

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