India's Graduate Employability Declines Amid AI Boom and Global Tech Layoffs As AI-driven automation replaces routine tasks, businesses are looking for candidates who can adapt, collaborate effectively, and demonstrate problem-solving abilities

As artificial intelligence (AI) continues to reshape industries and redefine job roles, Indian graduates are grappling with a shifting employment landscape. The latest India's Graduate Skill Index 2025 report by Mercer | Mettl reveals that graduate employability has declined from 44.3 per cent in 2023 to 42.6 per cent in 2024. This drop raises concerns about whether India's education system and workforce training initiatives are evolving quickly enough to meet industry needs, particularly as AI-driven automation transforms the job market.

The challenge is further intensified by a global wave of layoffs in the tech industry. Following significant workforce reductions in 2022 and 2023, more than 150,000 employees were laid off across 542 tech companies in 2024.

Meanwhile, the demand for AI and machine learning (ML) skills is on the rise, with 46 per cent of graduates now employable in AI-related roles—a significant improvement over previous years.

However, this rapid technological shift has widened skill gaps in non-technical roles. While employability in technical jobs has increased, non-technical roles have seen a decline, indicating that graduates without AI exposure are struggling to remain competitive. Employability rates also vary based on educational background, with Tier 1 college graduates leading at 48.4 per cent, followed by Tier 2 graduates at 46.1 per cent, and Tier 3 graduates at 43.4 per cent. This disparity underscores the need for educational institutions to modernise curricula and provide industry-aligned training.

Regional differences persist as well. Delhi, Himachal Pradesh, Punjab, and Uttarakhand report the highest employability rates, while Uttar Pradesh, West Bengal, Assam, and Telangana also rank among the top ten states. Meanwhile, the gender gap in employability remains relatively small, with male graduates at 43.4 per cent and female graduates at 41.7 per cent.

Beyond technical expertise, employers are increasingly prioritizing soft skills such as communication, critical thinking, and leadership. As AI-driven automation replaces routine tasks, businesses are looking for candidates who can adapt, collaborate effectively, and demonstrate problem-solving abilities.

Yet, the specter of layoffs continues to loom over the global job market. While AI is creating new opportunities, it is also prompting businesses to restructure aggressively. Amazon recently laid off dozens of employees in its communications department, citing the need to "move faster, increase ownership, and bring teams closer to customers." Meanwhile, Meta has announced a five per cent workforce reduction, targeting low performers as it prepares for what CEO Mark Zuckerberg called an "intense year." These layoffs indicate that while AI is driving innovation, it is also eliminating certain job functions, particularly in roles that can be automated.

For Indian graduates, these trends signal the need for a proactive approach to skill-building. AI expertise is no longer just an advantage—it is becoming a necessity. The job market is growing increasingly competitive, with employers expecting candidates to combine technical proficiency with adaptability and cross-functional skills.