chapter  3
40 Pages

The employment market in India

With a workforce of more than 400 million, India is often regarded globally as a main source of human capital. However, paradoxically, illiteracy rates are nearly 60 percent and less than 12 percent or 48 million people are college graduates.1 India’s talent pool is, arguably, not large enough to sustain both domestic economic growth and an outflow of human capital. Recruiting workers with the right skills is a growing problem among employers in India. While the state has authority over India’s educational system, when it comes to implementation, it has relatively less control and standards vary across provinces. The training in many tertiary institutions falls below global standards and below the expectations of most large Indian firms and multinational companies (MNCs).2 For example, India produces approximately 300,000-400,000 new engineers every year but only between 10-25 percent are considered ready for the job market by employers. Companies are being forced by market conditions to inflate salaries to attract college graduates from top business schools and elite colleges. Entry level workers are commanding higher salaries and the rate of labor turnover or churn is rising.3 This chapter will examine the employment market in India to understand why there is still an outflow of human capital in India despite the growing job market. This chapter will also record the perspectives of both employers and Indian professionals.