Why 15 lakh engineers aren’t enough for India’s AI economy

India produces nearly 15 lakh engineering graduates every year, a number that should, in theory, comfortably feed the country’s growing digital economy. But as AI reshapes hiring priorities and compresses skill cycles, that volume is proving for job-ready, future-facing talent.

There is a gap, but it is not about quantity, but relevance.

“Earlier in the IT industry, demand was very diversified. You had requirements for infrastructure L1, L2 support, testing, legacy COBOL mainframes and more. But now the demand is concentrated only on AI, data, cloud and cybersecurity,” says Kapil Joshi, CEO, Quess IT Staffing, Recruitment and Search, in a conversation with Business Today. “Two years back, these skills contributed only 30% of demand. Last year it became 52%, and as per last quarter it is almost 60%.”

This sharp shift has left a majority of fresh graduates underprepared. While India’s top institutions have begun integrating emerging technologies into their curriculum, exposure remains limited.

“India produces almost 15 lakh engineers every year, but only about 1 lakh would have exposure to emerging technologies,” Joshi said, underlining the scale of the mismatch.

The consequences are already visible on campuses. As the placement season approaches, outcomes are increasingly split along institutional lines. Students from Tier 1 and select Tier 2 colleges, especially those with strong R&D ecosystems and innovation labs, continue to see robust hiring. But remaining institutions are struggling to keep pace.

“The demand is clearly in data, cloud and cybersecurity. Another area seeing strong traction is platform engineering,” Joshi adds.

At the same time, headlines around layoffs, globally and in parts of the tech sector, with most recent report on Oracle laying off 30,000 people, have added to anxieties among job seekers. Yet, beneath the noise, demand in emerging technology roles remains strong and, in many cases, unmet.

Cybersecurity is a case in point. “India has roughly 3,20,000 lakh cybersecurity professionals, says Joshi but the demand created last year alone was around 800,000. So there is a huge demand-supply gap,” he said.

A key structural challenge lies in the pace of technological change. With new tools, languages and frameworks evolving every two to three years, the traditional four-year engineering degree struggles to stay current.

“By the time you update curriculum and students graduate, the technology has already changed. The tenure of technology is much shorter than the duration of education,” he explained. “No matter how closely academia works with industry, it is very difficult to produce industry-ready talent at scale.”

This has triggered a rethink in hiring models. According to Joshi, companies are increasingly moving away from direct campus hiring towards internship- and apprenticeship-led pipelines, allowing them to train candidates on the job before absorbing them into full-time roles.

“What we need is short-term reskilling programmes. The government’s focus on internships and apprenticeships is working well,” Joshi said. “A lot of freshers are now entering the corporate world through these routes rather than direct hiring.”

For India’s AI ambitions, the talent engine is running, but it needs recalibration. Without faster skilling cycles and deeper industry-academia alignment, the country risks having a surplus of degrees, but a shortage of deployable talent.