The Rising Unemployment Among IIT Students: A Deep Dive into the Impact of AI
The Indian Institutes of Technology (IITs) have long been regarded as the crown jewels of India's technical education system, producing some of the world's brightest engineering minds. However, recent years have witnessed a disturbing trend - a significant rise in unemployment among IIT graduates. As the 2023-24 placement season concluded, over 7,000 students from across all 23 IIT campuses remained unplaced, a sharp increase from the 3,400 unplaced students just two years prior . This alarming situation has sparked intense debate about its root causes, with many pointing to the disruptive impact of artificial intelligence (AI) as a major contributing factor. The intersection of global economic uncertainties, shifting industry demands, and rapid AI advancement has created a perfect storm that is challenging even India's most elite technical graduates.
The Current Employment Crisis at IITs
The employment scenario at IITs has reached crisis proportions, with placement statistics revealing unprecedented challenges. Data obtained through Right to Information (RTI) applications filed by IIT Kanpur alumnus Dheeraj Singh shows that only 13,410 of the 21,500 students who registered for placements in 2024 secured employment, leaving a staggering 38% still searching for jobs . The situation is particularly dire at the older, more established IITs, where 37% of registered students (6,050 out of 16,400) failed to secure placements. The newer IITs face an even bleaker picture, with 40% of their 5,100 registered graduates remaining unplaced . These numbers represent a dramatic worsening from just two years ago when the unplaced percentage stood at 19% (approximately 3,400 students) 1. The crisis has forced IIT administrations to take unprecedented measures, including reaching out to their extensive alumni networks for assistance in placing current students .
The employment challenges are not limited to campus placements alone. Many graduates who do secure positions face delayed onboarding, sometimes waiting up to two years to actually begin their jobs . This precarious situation has led many IIT graduates to explore alternative career paths, including preparation for competitive government examinations like the UPSC or banking services, or considering entrepreneurship through startups . The phenomenon reflects a broader crisis in India's engineering education system, where nearly 48% of all engineering graduates across the country remain unemployed, according to NITI Aayog vice chairman Rajiv Kumar . However, the fact that this unemployment crisis has reached even the hallowed halls of the IITs suggests deeper structural changes in the employment landscape, particularly in the technology sector where most IIT graduates traditionally found employment.
AI's Disruptive Impact on Traditional Tech Jobs
Artificial intelligence has emerged as a transformative force across industries, but its impact on the job market, particularly for technical graduates, has been profound and multifaceted. The rapid advancement of AI technologies, especially in areas like machine learning, natural language processing, and automation, is reshaping the very nature of work that IIT graduates have traditionally been hired to perform. V Ramgopal Rao, BITS group vice-chancellor, succinctly captured this shift when he noted, "If two people can do the work of three people, we are already 30% down in hiring" . This statement highlights how AI-driven productivity gains are reducing the overall demand for human labor in many technical domains.
The displacement effect of AI is particularly evident in roles that involve routine cognitive tasks, structured physical work, and basic customer service functions . For IIT graduates, this means many traditional entry-level positions in software development, data analysis, and basic engineering design—roles that have historically absorbed large numbers of fresh graduates—are now being automated or augmented by AI systems. Banking sector transformations provide a clear example: AI-powered systems like JPMorgan Chase's COIN can perform document review work that previously required 360,000 hours of lawyer time annually . Similar efficiencies are being realized across manufacturing, where companies like Foxconn have replaced tens of thousands of workers with robots, and in transportation, where autonomous vehicle technology threatens to displace millions of driving jobs globally .
The changing skill requirements in the tech industry present another significant challenge. The job market is increasingly favoring expertise in AI, machine learning, and data science—skills that the traditional IIT curriculum has not emphasized enough . While IITs are renowned for their rigorous technical education, the pace of AI advancement has created a gap between what students learn and what employers need. This mismatch is compounded by the fact that AI tools are democratizing access to technical capabilities, allowing non-specialists to perform tasks that once required engineering degrees . The result is increased competition for the remaining technical roles and downward pressure on salaries for traditional engineering positions.
The Global Context: AI and Employment Trends
The challenges facing IIT graduates must be understood within the broader context of global employment trends shaped by AI advancement. The World Economic Forum estimates that while 85 million jobs may be displaced by AI and automation by 2025, 97 million new roles may emerge—creating a net positive of 12 million jobs globally . However, this net gain masks significant disruptions and transitions that are proving painful for many workers, including highly skilled technical graduates. The new jobs being created often require different skill sets than those being lost, leading to structural unemployment during the transition period.
Regionally, the impact varies significantly. North America is projected to see 1.5 million new AI-related positions, China 1.2 million, the European Union 900,000, and India approximately 800,000 specialized AI jobs . While these numbers appear promising, they represent a fundamental restructuring of the employment landscape that disadvantages those trained for the disappearing roles. The situation is further complicated by the fact that many of the new AI-related jobs require advanced specialization or combinations of technical and domain expertise that recent graduates may lack .
Paradoxically, some empirical studies suggest that AI may actually decrease overall unemployment levels in high-tech developed countries . However, these aggregate figures obscure the painful transitions experienced by specific demographic groups, including recent technical graduates. The displacement effect is particularly acute in sectors like retail (7.5 million jobs at high risk), manufacturing (4.6 million), transportation (3.3 million), financial services (2.9 million), and customer service (2.5 million) . Many of these sectors have traditionally employed significant numbers of engineering graduates in various capacities.
India's AI Talent Gap and Its Consequences
While India faces an unemployment crisis among its technical graduates, it simultaneously confronts a severe shortage of skilled AI professionals—a paradox that highlights the mismatch between education outputs and industry needs. According to Nasscom, India ranked first in AI skills penetration with a score of 3.09 in 2023, with an AI talent base of 416,000 professionals against a demand for nearly 629,000, leaving a 51% skill gap . By 2024, India had moved to second position in the AI talent base as the AI and GenAI tech services industry and startup ecosystem saw steady growth, but the gap persists .
This talent gap manifests in several ways that directly impact IIT graduates. First, while there is strong demand for AI specialists, most IIT curricula have been slow to adapt, leaving graduates without the specific skills employers seek. Second, the Indian AI ecosystem lacks sufficient senior talent to lead teams and mentor junior professionals—only 8% of companies in the mature stage of AI adoption have designated AI leaders, and just 13% of enterprises have dedicated AI teams in India . This limits the capacity of organizations to hire and develop fresh talent.
The problem is compounded by migration patterns of India's top technical talent. Many of the brightest IIT undergraduates pursue graduate studies abroad, particularly in the United States, and often do not return . This brain drain deprives India's growing AI ecosystem of precisely the cutting-edge researchers and innovators needed to drive it forward. The result is a suboptimal mix of AI talent in India, with predominantly low-tier implementers rather than the top-tier researchers and innovators required to build a globally competitive AI industry .
Industry Responses and Changing Hiring Patterns
The technology industry's response to AI advancement has significantly altered hiring patterns for fresh graduates. Many companies are adopting an "AI-first" strategy that prioritizes hiring professionals with AI expertise over those with traditional engineering skills . This shift is particularly evident in campus recruitment, where companies are increasingly looking for candidates skilled in cloud computing, data engineering, and software development with AI capabilities .
Major Indian IT firms are adapting their hiring practices in response to these changes. Wipro, for example, plans to hire up to 12,000 new employees in FY26, with a focus on AI-skilled professionals . Similarly, other organizations are intensifying their campus recruitment efforts for qualified experts in emerging technologies. However, these hiring intentions often focus on specific skill sets that not all IIT graduates possess, leading to the apparent contradiction of high unemployment among graduates alongside talent shortages in AI specialties.
Global Capability Centers (GCCs) have emerged as significant employers in this changing landscape, offering entry-level candidates salaries up to 30% higher than industry standards for in-demand skills . These GCCs are projected to increase fresher hiring by 40% compared to previous years, but their selective focus on specific competencies means they absorb only a portion of graduating classes 15. The overall result is a bifurcated job market where graduates with AI-relevant skills command premium salaries while others struggle to find employment in their chosen fields.
The Role of Curriculum and Institutional Responses
The widening gap between industry needs and graduate skills has raised serious questions about the relevance and responsiveness of technical education curricula, including at elite institutions like the IITs. While the IITs have begun introducing AI and machine learning courses, the pace of curricular reform has not kept up with the rapid evolution of industry requirements . This lag creates a mismatch where graduates spend four years studying a curriculum that may already be outdated by the time they enter the job market.
Several strategies could help bridge this gap. Continuous curriculum updates to include the latest AI technologies and methodologies are essential to ensure graduates possess relevant skills . Encouraging a culture of lifelong learning and continuous professional development can help graduates stay ahead of technological changes . Strengthening collaborations between academia and industry can ensure educational institutions remain aligned with evolving job market needs .
Some institutions have begun taking proactive steps. The Birla Institute of Technology and Science (BITS), for example, has acknowledged the impact of AI on employment patterns and is working to adapt its programs accordingly . However, systemic change across the IIT system will require concerted effort and may face resistance due to institutional inertia and the challenges of reforming well-established curricula and teaching methods.
Psychological and Social Impacts on Students
The employment crisis is taking a significant psychological toll on IIT students who entered these prestigious institutions with high expectations of guaranteed career success. The reality of struggling to find employment after years of intense academic preparation creates considerable stress and anxiety. For many students and their families, admission to an IIT represents a significant investment of time, money, and effort, making the failure to secure employment particularly devastating.
The situation has led many graduates to reconsider their career paths entirely. Some are turning to competitive government examinations like the UPSC or banking services, seeing these as more stable alternatives to the volatile tech job market . Others are exploring entrepreneurship, though this path comes with its own set of challenges and risks. Saloni Khanna, a UPSC interviewer and founder of Skill Up Foundation, notes that "about 80% of unemployed people are the ones preparing for government exams" , highlighting how the tech employment crisis is driving talent toward traditionally less preferred public sector roles.
The psychological impact extends beyond immediate employment concerns. Many students report feeling that the rapid pace of technological change has made their hard-won technical skills obsolete even before they could apply them professionally. This sense of obsolescence can lead to disillusionment with the engineering profession altogether and questions about the value of their elite education.
Government Policy and National AI Strategy
India's national AI mission (NAIM), also known as the IndiaAI Mission, launched in 2024 with a budget outlay of ₹10,371.92 crore (approximately $1.3 billion) over five years, represents the government's recognition of AI's transformative potential and the need for a strategic response . The mission focuses on seven elements of the "AI stack": computing/AI infrastructure, data, talent, research and development (R&D), capital, algorithms, and applications 2. However, implementation has heavily emphasized hardware and compute infrastructure at the expense of equally critical elements like talent development and research .
To truly address the employment challenges facing technical graduates, India's AI strategy must place greater emphasis on developing human capital. This includes not just increasing the number of AI courses but addressing the reasons why India's top-tier AI talent migrates abroad . It also requires building "digital public data" to fuel India-specific AI models and research, as most Indian digital data is currently locked within platforms owned by global tech firms . Without these complementary investments, India risks building AI infrastructure without the talent and data ecosystems needed to fully leverage it.
The government has initiated some promising programs, including the Digital India Program to transform India into a digital-first country and the Startup India Program to fund and encourage tech startups . However, these need to be better coordinated with educational reforms to ensure a pipeline of graduates equipped with relevant skills. There is also a need for policies that encourage retention of top AI talent within India and attract back those who have gone abroad for advanced study and work experience.
The Future Outlook and Potential Solutions
Looking ahead, the employment challenges facing IIT graduates are likely to persist and potentially intensify as AI capabilities continue to advance. However, this disruptive period also presents opportunities for those able to adapt and acquire the right skills. The key for both individuals and institutions is recognizing that the era of linear career paths based on static skill sets is ending, replaced by a dynamic environment requiring continuous learning and adaptation.
For IITs, the path forward involves comprehensive curriculum reform to integrate AI and related technologies across disciplines, not just as isolated courses. This should be accompanied by stronger industry partnerships to ensure academic programs remain aligned with real-world needs. The institutions must also foster an entrepreneurial mindset among students, equipping them to create jobs rather than just seek them.
For students, success will increasingly depend on supplementing their core technical education with AI literacy, regardless of their specific discipline. Developing skills in complex problem solving, creativity, digital collaboration, adaptability, and ethical judgment—areas where humans still outperform AI—will be crucial . Combining technical expertise with domain knowledge in fields like healthcare, finance, or manufacturing can create valuable hybrid skill sets less vulnerable to automation.
At the national level, India needs a more balanced AI strategy that develops all elements of the AI stack in tandem, with particular attention to talent development and retention. Policies that encourage AI research and startup formation can help create new opportunities for technical graduates. There is also a need for better labor market information systems to help students make informed choices about skill development and career paths.
Conclusion
The rising unemployment among IIT students serves as a canary in the coal mine for broader disruptions facing technical education and employment in the AI era. While AI is not the sole factor in this crisis—global economic conditions and industry-specific dynamics also play significant roles—its transformative impact on the nature and quantity of technical jobs is undeniable. The situation reveals systemic challenges in aligning elite technical education with rapidly evolving industry needs and highlights the imperative for continuous learning in an era of technological disruption.
Addressing these challenges requires concerted action from educational institutions, industry, government, and students themselves. The IITs must evolve their curricula and pedagogy to prepare graduates for an AI-driven world. Industry needs to work more closely with academia to bridge skill gaps and support continuous learning. Policymakers must create an environment that fosters both AI innovation and employment growth. And students must embrace lifelong learning to remain relevant in a job market that will continue to evolve unpredictably.
While the current situation appears bleak for many IIT graduates, history suggests that technological revolutions ultimately create more opportunities than they destroy. The transition, however, can be painful for those caught in the shift. By understanding the forces at work and proactively adapting to them, India's technical education system and its graduates can navigate this disruptive period and emerge stronger in the AI-powered economy of the future. The alternative—maintaining the status quo—risks squandering India's demographic dividend and undermining the global competitiveness of its most prestigious technical institutions.
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