By Karun Tadepalli
India’s growth story has been fuelled by new aspirations of smaller towns. Tier 2 and tier 3 cities have played a crucial role in this transformation, emerging as hubs of talent, ready to contribute to the country’s innovation and job market.
Cliche or not, necessity could well be the mother of invention. But as far as Indian stories go, crises birth innovation. Indian states with larger tier 2 and tier 3 centres are beginning to see massive dividends they can accrue by tapping into talents in smaller towns. For instance, the Madhya Pradesh GCC Policy 2025 covering IT, finance, engineering, human resources, and emerging technologies – especially artificial intelligence (AI) and cybersecurity – aims to nurture and integrate talent from smaller colleges into the broader industry ecosystem. Under the policy, the state will be providing incentives for capital expenditure, payroll, upskilling, and R&D, with a designated nodal agency.
Such policies are the need of the hour. IITs have long been the beacon of technical education, producing bright minds who have made a global impact. But the reality of today’s job market presents challenges even for these premier institutions. Despite their stellar reputation, only 75% of participating students secured jobs, and across all IITs combined, 38% of graduates remain unemployed, highlighting the broader challenges facing the education-to-employment pipeline. In terms of numbers, this translates to 7,000 students who went home empty-handed during placement drives. The average pay at IIT Bombay last year was Rs 23.5 lakh per annum – a far-cry from the days when eye-popping packages for freshers would make headlines.
This issue extends beyond IITs. As per findings of ‘Unstop Talent Report 2025’, based on a survey of 30,000 Gen Z professionals and 700 HR leaders, the placement situation is more than abysmal. As per the report, 83% of engineering graduates across India left without a job or internship offer. The report adds that nearly 50% of MBA holders remain unemployed. Even as India’s IT giants – Infosys and TCS – plan to hire aggressively in FY25, the sheer volume of unplaced graduates raises a critical question: Where is the disconnect?
A significant shift is occurring in hiring patterns. Nearly 73% of recruiters prioritise talent-based hiring over institutional prestige, recognising that skill and adaptability matter more than the name of a college. Yet India’s engineering education system continues to operate under an outdated paradigm, where emphasis is placed on textbook-based learning rather than real-world application. Between 2019-20 and 2023-24, as many as 30% of BTech seats remained unfilled across the country’s 3,000 engineering colleges. Of those who did enrol, only 47.7% secured placements.
Despite ranking 39th in the Global Innovation Index, India lags far behind in critical areas. The Principal Scientific Advisor to the government of India, Ajay Kumar Sood’s report from November 2024 highlights significantly critical gaps in gross expenditure on R&D (GERD) and university-industry collaboration. India ranks 86th in university-industry R&D partnerships, reflecting a disturbing disconnect between education and employability.
Many in the industry note that jobs do exist in India, but graduates fail to meet evolving industry standards.
While IITs remain a gold standard of technical education, talent is not limited to these institutions. Tier 2 and tier 3 colleges house millions of aspirational students whose circumstances often limit their opportunities. Social positioning, communication skills, and economic barriers prevent many bright minds from accessing the same networks and exposure as their IIT counterparts. Yet potential exists in every corner of the country, waiting for the right avenues to be recognised.
Innovation must take precedence over outdated placement models. Encouraging students to participate in hackathons and real-world simulations is imperative. Such initiatives mirror industry expectations and equip students with problem-solving skills beyond theoretical knowledge. The onus lies not just on educational institutions, but also on corporations to actively engage with talent outside of conventional recruitment pools.
India’s future in technology and innovation hinges on how effectively it bridges this divide. The talent pool is vast. Without systemic changes in how skills are nurtured and validated though, millions of our youth will remain on the periphery of visibility. It is time to stake a claim in the global innovation landscape by broadening our vision to recognise that India’s real intellectual wealth lies in its depth and diversity, not just its elite institutions.
The author is CEO & co-founder of byteXL, an edtech startup.
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