In Short:
India’s $250 billion tech sector is facing a shortage of 1 million engineers with advanced skills in AI and other technologies over the next 2-3 years. The sector needs to reskill over half of its existing workforce. The country’s poor schooling system is identified as the root cause of the skill gap. IT companies like Tata Consultancy Services are struggling to fill positions, posing a threat against global rivals.
India’s Tech Sector Faces a Shortage of Skilled Engineers in AI and Other Technologies
India’s technology sector is projected to require more than 1 million engineers with advanced skills in artificial intelligence and other areas within the next 2-3 years, as estimated by the National Association of Software and Service Companies (Nasscom). This demand highlights the necessity for a significant enhancement in education and training by the government to fill the skills gap.
Skills Upgrade Needed
Sangeeta Gupta, senior vice president and chief strategy officer at Nasscom, stated that the sector must reskill over half of its current workforce to meet the demands of fields like AI, big data analytics, and cyber-security. It is noted that new graduates will only be able to fulfill a quarter of the required advanced tech positions.
Gupta emphasized the importance of continuous upskilling to keep pace with the evolving digital landscape, citing a significant employability challenge in the workforce.
The $250 billion tech sector in India is a significant contributor to the economy, employing approximately 5.4 million individuals. Tech services account for around 7.5% of the country’s GDP of over $3 trillion.
Challenges Faced by IT Firms
Leading IT companies like Tata Consultancy Services Ltd. are encountering difficulties in filling positions due to the disparity between workforce skills and industry requirements. This could potentially put Indian IT firms at a disadvantage compared to global competitors like IBM and Accenture.
For instance, TCS reported a shortfall of 80,000 jobs due to the skills gap and heightened its AI training efforts during the last fiscal year. Similarly, Larsen & Toubro Ltd. highlighted a shortage of 20,000 engineers in its IT and IT-enabled services division.
Addressing the Skill Gap
Gupta emphasized that the root cause of India’s skill gap lies in the inadequate schooling system, both at lower levels and in colleges that do not impart practical skills necessary for the job market. Nasscom predicts a widening demand-supply gap for digital talent from 25% to 29% by 2028.
Economists like Raghuram Rajan have warned that India’s deficient schooling system could impede growth prospects, especially in a country where over half of the population is below the age of 30. Reports suggest that educated young individuals are more likely to face unemployment compared to those without formal education.
