Graduate Employability and AI-Driven Skilling and Education

Graduate employability remains a pressing concern in India. While higher education enrollment continues to rise, a significant portion of graduates struggle to secure jobs that align with their qualifications. The root of the issue extends beyond mere job availability to the disconnect between academic learning and industry demands.

With the rise of artificial intelligence (AI) and emerging technologies, skill requirements are evolving rapidly. While some sectors face declining employability, fields like AI and data science are creating new career opportunities. Addressing this employment gap necessitates strategic collaboration among educational institutions, industries, and policymakers.

This article delves into insights from the India Graduate Skill Index 2025, the impact of AI on employment, and government-led initiatives aimed at leveraging AI for skill development and entrepreneurship.

The Graduate Employability challenge: Insights from Economic Survey 2024-25

A growing skills mismatch has left many graduates underemployed, highlighting a disconnect between academic qualifications and labor market demands. Key findings from the Economic Survey 2024-25 include:

• Over 53% of graduates and 36% of postgraduates are employed in roles below their educational qualifications.
• Alarmingly, only 8.25% of graduates are in jobs that match their academic credentials.
• The mismatch arises from labor market inefficiencies and imbalances in skill supply and demand.
• Employers highlight a gap between expected and actual skills, emphasizing the need for curriculum reforms and stronger industry-academia collaboration.

Key findings from Mercer | Mettl India’s Graduate Skill Index 2025

The India Graduate Skill Index 2025, published by Mercer | Mettl, sheds light on critical trends in graduate employability:

• Overall employability has declined to 42.6%, with non-technical roles witnessing the sharpest drop.
• Graduates from Tier 1 colleges exhibit the highest employability at 48.4%, followed by Tier 2 (46.1%) and Tier 3 (43.4%) institutions.
• 46% of graduates are employable in AI and machine learning roles, indicating a rising demand for technical skills.
• Delhi, Himachal Pradesh, Punjab, and Uttarakhand lead in employability, while Uttar Pradesh, West Bengal, Assam, and Telangana also rank among the top 10 states.
• Soft skills like communication, critical thinking, and leadership are highly valued, yet creativity remains an area for improvement.
• 28% of employers anticipate a major shift in technical skills for one-third of their workforce by 2025, underscoring the urgency for reskilling initiatives.

Read the full report: Mercer | Mettl India’s Graduate Skill Index 2025

AI and its role in addressing skill gaps

AI is transforming industries, creating new job opportunities while rendering certain traditional roles obsolete. Employers are now prioritizing candidates who can adapt, collaborate, and demonstrate high learning agility. As India embraces AI, the demand for professionals skilled in AI-driven solutions continues to rise. The IndiaAI Mission, backed by a budget of Rs. 10,371.92 crore, is set to bolster AI research, innovation, and skill development across the country.

Government initiatives: AI in skill development and education

AI for entrepreneurship – Intel India’s collaboration with MSDE

To equip youth with AI-driven skills, Intel India, the Ministry of Skill Development and Entrepreneurship (MSDE), and NSDC have launched the “AI for Entrepreneurship” micro-learning module. This initiative:

• Introduces simplified AI concepts for easy understanding.
• Promotes an entrepreneurial mindset and innovation.
• Offers certification endorsed by MSDE, NSDC, Skill India, and Intel.
• Is available on the Skill India Digital Hub (SIDH).
• Aims to train 1 lakh learners, fostering AI literacy and entrepreneurship.

Artificial Intelligence (AI) is set to transform India’s economy, contributing over $500 billion and generating nearly 20 million jobs by 2025. To prepare for this shift, the government is actively promoting AI-driven skill development and education.

The need for AI training and skill development

AI is reshaping job roles, creating new opportunities while making some traditional skills obsolete. Continuous learning, reskilling, and AI adoption are crucial for a future-ready workforce.

The Government of India has launched various programs to equip individuals with AI skills and integrate AI into education. Learn more here.

AI in education: A necessity, not just a trend

AI is revolutionizing learning by bridging gaps and enhancing teaching methods. India is committed to democratizing AI in schools, ensuring inclusive and accessible education in alignment with NEP 2020.

From adaptive edtech platforms to AI-driven multilingual tools, AI is making education more inclusive, particularly in Tier 2 and Tier 3 cities. Events like the ISB Insights Forum 2024 further emphasize the role of AI in research and skill development.

India faces challenges like large student populations and limited access to quality education in remote areas. AI-powered solutions can help bridge these gaps. Learn more here.

Also read: The Crucial Role of Skills in Achieving Sustainable Employability

India’s job market is undergoing a fundamental shift, necessitating a stronger focus on AI-driven skill development. With declining overall employability but rising demand for AI and technical skills, the education system must realign with industry needs. To enhance graduate employability, India must bridge the gap between education and industry by integrating AI-driven skills into curricula. Government-backed initiatives, private sector collaborations, and AI-powered learning solutions are paving the way for a future-ready workforce.  Strengthening employability will require a multi-pronged approach, encompassing curriculum reforms, industry engagement, and technological interventions to bridge the ever-widening skill gap.

As AI continues to redefine career opportunities, lifelong learning and adaptability will be key to ensuring employability in the evolving job landscape. For graduates, this means acquiring AI and digital skills that enhance job readiness and career prospects. A collaborative effort between educational institutions, industries, and policymakers is crucial to equipping graduates with the skills needed for a competitive job market in the digital age.