Navigating Job Crunch

A STUDENT pursues a post-graduate degree or diploma from a B-school for two reasons — to get a high-paying job or become an entrepreneur. Most in the former category want a ‘dream job’ at multinational companies. All organisations need managers, after all. But the job market for entrants has hit a wall. The trend started in 2022 and continued in 2023; 2024, too, looks unpredictable.

In 2023, every B-school, from top to mid and lower level, struggled to place students. At IIM Ahmedabad, which topped the National Institutional Ranking Framework (NIRF) for the 5th time in 2024, maximum earning potential (MEP) for one-year executive course this year dipped to a six-year low. The highest package, ₹54.8 lakh per annum (LPA), was 50% lower than ₹1.08 crore in 2023. It was lower than even the average highest MEP from 2018 to 2022 (₹70.56 lakh). Utkarsh Shukla, the PGPX recruitment secretary of IIM-A, says this year was especially challenging due to “tough market conditions.” A total of 120 firms took part in IIM-A’s post-graduate programme summer placement, a decline from 145 a year before. A total of 96 students got 145 “dream applications” (flexibility to choose sectors), down from 250 in 2023. Final placements for 2024 will happen in January-February 2025.

Aban Padung, placement coordinator at IIM-A, says evolving industry dynamics have shaped current challenges. “A layer of uncertainty can’t be ignored. Economic conditions such as inflation and global disruptions impact hiring trends. They push companies to be cautious with their recruitment strategies,” says Padung. Still, the country’s top B-school has been resilient. “Even though there has been a contraction in some sectors, new ones are emerging. They present fresh opportunities.” Of the 20 IIMs in India, IIM-A is part of the first generation of B-schools that rank on top. Other first-gen IIMs include IIM Kolkata, IIM Ahmedabad, IIM Bangalore, IIM Lucknow, IIM Indore, IIM Kozhikode and IIM Shillong.

IIM Bangalore expanded its 2023-25 PGP+ PGPBA batch from 530 to 604 in 2022-24. The number two B-school on the NIRF list struggled during summer internships. Around three dozen students were reportedly still to be placed until last week. The school received 602 internship offers for 604 students, with three opting out. A year ago, there were 539 offers for a batch of 530.

Realising that times are tough, IIM Calcutta (NIRF rank five) pushed hard for summer internships through alumni.

IIM Lucknow used a similar strategy. This may not be an unusual practice for B-schools but IIMs, at least the top five, were never short of companies willing to hire their students. “Job sentiment is low. Some companies offered lower salaries than last year. The struggle was visible. We pulled all stops to ensure everyone in the class had a job in hand,” says a student who passed out from one of the IIMs this year, requesting anonymity. “If this is the situation in top B-schools, imagine what’s happening in newer IIMs and lower-ranked schools,” he says.

At SPJIMR (NIRF rank 20), average salary was the same as last year (₹33 LPA) but median salary declined from ₹32.89 LPA in 2023 to ₹31.5 LPA this year. The highest salary, however, increased from ₹77.88 LPA to ₹81 LPA. KJ Somaiya Institute of Management (NIRF rank 63) has completed 97% placements for 2022-2024 batch. Out of 620 students who took part in placements, 89 got pre-placement offers. Anjali Chopra, associate professor and chairperson of professional development & placement committee, says placement quality has been “sub-par.” “KJ Somaiya has 600 students. We ensure they are prepared for the world of work from the first month. Being in Mumbai is a great opportunity due to strong industry-academia linkages,” says Chopra. The B-school has seen a “slight” increase in the average salary over last year (₹13 LPA).

IIM Indore director Himanshu Rai says the reason is the poor job market and not the quality of students. He says the quality can’t be so different year-on-year as admission method and instruction remain the same. “If jobs are fewer, it becomes an industry-driven salary market rather than supply or student-driven. Salaries are going down because of that,” he says.

Hiring Slowdown

The hiring slowdown is clear across industry. Pre-placement offer conversions by firms dipped 26% from FY23 to FY24, according to Deloitte India’s campus workforce trends 2024 report in May. Campus placement budget dipped 33% compared to last year. Another recent study by Bank of Baroda Research, based on data from 1,196 companies, shows lacklustre growth in corporate sector jobs — employment growth in corporate sector slowed to 1.5% in FY24 from 5.7% in FY23; 90,840 people got new jobs as against 3,33,000 in FY23.

Experts blame three factors for hiring slowdown — AI, companies’ focus on core capacity and pressure on profits. Shiv Shivakumar, who has served on eight B-school boards, says tech disruption has led to a ‘domino’ effect. “Because of AI, a lot of U.S. tech firms have cut or stopped hiring,” says the ex-chairman & CEO of PepsiCo India and ex-CEO of EM-Nokia. The effect is visible in tech-related industries, too, he says. “In 2023, the U.S. shed about 124 jobs a day. Now, it is shedding 790 jobs a day,” he says. The companies are saving money and investing in AI and other tech, he adds. India is also facing the issue of overcapacity. It has around 3,200 B-schools. The number is 14,000 for the entire world. “So, every B-school, specifically IIMs, with batch strength of over 400 is struggling,” says Shivakumar. Companies are under increasing pressure to earn more profit. “Tech is disrupting their business model. So, if I need five people, I will hire four,” he adds.

AI is also impacting the job landscape, though the extent of damage is unknown yet. “The scenario is alarming as well as heartening,” says Bengaluru-based Sameer Dhanrajani, CEO of AIQRATE & 3AI, a Bengaluru-based AI advisory and consulting firm. The IIM-B alumnus says skills and competencies will get an overhaul. Sunita Srivastava, director of Mumbai-based Aditya Institute of Management Studies and Research, says economic uncertainty has made companies cautious. “The industry is changing. Employers are looking for applicants with specific talents rather than general management expertise. This can create a mismatch,” she says.

Neelesh Gupta, partner, Deloitte India, says tech firms have been major contributors to demand-supply recalibration. “You should look at industry-wide sectors like manufacturing, which have been steady. But they have low volumes. The trend is dominated by tech. On one side, you’ve lakhs of people getting hired, while on the other, you have a few thousand. If you look at some indices, especially the Services PMI Index, it has been broadly positive. We expect next year to be better than this year,” he says, adding there is a slight drop in compensation. “We don’t foresee a consecutive drought in salaries, a trend seen for the first time in five years. If we break it by industry, manufacturing will see volumes rise much more compared to others. Services, barring tech, are also likely to be steady,” he says, adding that AI’s net impact on new jobs is unknown yet. “The primary reason is hiring volume in 2021-23. It was in line with business forecast or outlook. Markets and businesses didn’t respond in line with it. If we see it again next year, we’ll have to coin a new term. We hope it’ll still be a blip year.”

Another crucial aspect of hiring is attrition. Deloitte says management compensation grew at a CAGR of 6% over past four years but fell 7% in 2023 due to financial strain on organisations. “A sense is prevailing that if I hire this talent (fresher), it will leave me faster than others. So, should I pivot to Tier-I or Tier-II talent, which will stay with me? The top decile is comparable in contribution to top 10 average talent. Tier-II talent has much higher longevity. Companies want to focus on tacit knowledge one develops over the years rather than quick churn,” says Gupta.

What Companies Want

Hiring strategies have changed with time. Firms like Tata Group’s Titan Company have sharpened processes to bring in the best talent. “Summer internship is a great way for the intern and the organisation to understand each other,” says Priya Mathilakath, head, people function, manufacturing, corporate & retail, Titan. Priya agrees there’s “slow” energy across campuses, but says many top-tier institutions continue to report strong placement outcomes. “Institutions need to build stronger capabilities and capacities in students to help them navigate any speed bumps in placement,” she says.

Recruiters want candidates with high soft skills and subject expertise. A global mindset and ability to be agile and adaptive are must-have. “When hiring from B-schools, recruiters look for highly developed analytical skills, business acumen and leadership,” says Viswanath P.S., MD & CEO, Randstad India. He says there’s always a demand for niche skills. Like social media platforms, programming languages and digital tools. “Companies look at freshers from a long-term perspective to curb attrition,” he says. There has been a “slight dip” in compensation across job profiles due to global volatility, says Viswanath. But some sectors are also showing recovery signs. “Firms are re-structuring workforces to meet demand, leading to minor trimming in fresher salaries. Manufacturing, telecom, BFSI and e-commerce are doing better than last year,” he says.

Sameer of AIQRATE & 3AI, who has served in key positions in Fractal, Cognizant, Fidelity and Genpact, says the world is at an inflection point in talent landscape. “Mundane jobs are being displaced or getting replaced by AI,” he says, adding it’ll lead to emergence of new industries and roles. “Creative areas, sales and new-age application development will remain in focus,” he says.

Despite tech renaissance reshaping our world, fundamental skills like problem-solving and strong quantitative and qualitative aptitude will never go out of fashion. Sunil C., country manager, Adecco India, says recruiters prioritise strong pedigree, experience and tech & soft skills. “As market becomes competitive, especially for newer IIMs, candidates with experience in engineering or tech have an advantage. The trend is noticeable in technology, consulting and finance.” He says demand for those who can bridge the gap between strategy and tech implementation is growing. There has been a rise in specialised roles like techno-functional experts, he adds.

Redefining Rules

Some B-schools are adopting different approaches for meeting hiring challenges and bringing innovation. “We removed our placement office this year, becoming the first IIM to do so. We replaced it with CARE — corporate access readiness engagement — office. We are bringing in corporates throughout the year,” says Debashis Chatterjee, director of IIM Kozhikode. They will tell students how they can be ready for the corporate world. “These transitional skills should be given to students from Day 1. We are asking corporates to be ready for our students. These are bright kids. You don’t put them in a little pipeline where their intelligence is not used. We are not talking about employment, we are talking about employability,” he says. The B-school has removed the idea of a cookie-cutter placement (Day 0, Day 1 and Day 2). “Nowhere do you see placement offices except in India. This obsession with ‘naukri’ (job) has to go,” says Chatterjee.

IIM Indore’s Rai doesn’t see hiring slowdown as a big challenge, at least in top B-schools. “Salaries are commensurate with investments they (students) put into MBA. Students need to bolster their CVs. An MBA degree is not enough. They have to get other skills,” he says. IIM Indore has renamed the placement office as career service department. “As an institution, we don’t look at placement. IIMs impart learning. That learning gives you skills, attitude and knowledge. We help find careers — via new courses, niche skills, bolstering CVs and identifying passions. I hope it will bring some change.” He says the strength of IIM-I’s internship outcomes is “well-nurtured industry relationships.” Aban of IIM-A says they focus on creating a good fit. “Students are well-prepared in terms of expertise and personal goals. The roles they take up align with what they seek in their career.”

For KJ Somaiya, placements, while challenging this year, offer new opportunities. Chopra says the B-school has a strong alumni base in U.A.E. “We focus on industry-led certifications. We conduct readiness sessions with students and industry experts. Students are sensitised to the tough market conditions. (They) are encouraged to work on live projects and capstone to strengthen resumes. Around 70% of our recruiters are regular.”

Road Ahead

The biggest challenges organisations face while hiring are employability and skill set. “That continues. It has been a decadal challenge, specifically employability,” says Gupta of Deloitte India. “There are specific roles. You would be a robotics specialist or an assistant systems engineer but the curriculum is not completely aligned. So, if an institute can create specialists, there will be ready-to-deploy talent.”

Randstad’s Viswanath says there’s a continuous “moderate” gap in recruiters’ expectations and talent availability that can be filled with corporate, academic and apprentice partnerships. “Indian B-schools have been introducing supplementary courses within existing curriculums. Many B-schools are focusing on imparting soft skills like sustainable responsibility and ethical leadership. Individualistic skills like purpose, self-assessment and goal-orientation are equally important,” he says.

Shivakumar has some suggestions for B-schools. “Institutions should own placements because that is the informal guarantee they give to students when they join. In many places, placement is run by students, who have a one-year horizon. On the other hand, an institute needs to build B2B relations with other institutions. So, till the institutes build their professional placement cells, things will not change,” he says, suggesting that placements should be more representative of the broader Indian GDP. “Most placements are restricted to 75 Indian companies. Typically, these are consulting, banking, FMCG players. Placement should be broad-based.” He says B-schools run various MBA programmes and most fail to identify target students as well as firms. “They need to do both things right,” he adds.