India Inc. Embraces Skill-Based Hiring & GenAI Integration In Recruitment

Deloitte Touche Tohmatsu India (Deloitte India) latest campus workforce trends 2024 study unveils critical insights into the attrition rates, hiring strategies and evolving preferences in the entry-level job market. The comprehensive survey, encompassing data from over 190 organisations and 500 campuses, shows that campus compensation has grown steadily at a 5.2 per cent CAGR over the past five years across various degrees, despite a reduction in placement budgets.  The report indicates a shift towards hiring based on skills, and an increase in gender-diverse talent recruitment. It also points to the integration of Gen AI as a key trend reshaping talent management practices.

India’s campus hiring landscape is experiencing shifts in hiring methodologies and changing expectations from the workforce. The landscape is transforming to reflect the evolving job market and addresses the need for a skilled, adaptable workforce. Continued and coordinated efforts across stakeholders, including government, industry, and educators, are required to ensure these transformative trends benefit everyone within India's dynamic landscape.

The following are the notable insights:

1. For the first time in 5 years, 2024 projected salaries for management students (viz. MBA) are experiencing a drop of 5 per cent to 10 per cent across tiers. Notably, the expectation of salary by campus students is also experiencing a similar decline.

2. Variable pay increased by 250 basis points over the past year, indicating a shift towards higher performance orientation by employers.

3. Internship intake by organisations reduced by 10 per cent on an average, indicating declining uptake. Similarly, pre-placement offers (PPOs) have experienced an annual drop of 26 per cent. Complementing it, campus hiring budgets saw a 33 per cent drop in the past year.

4. Skills are taking centre stage. Organisations are pivoting to specific skills/competency clusters within the educational stream while selecting their talent. For example, AI/ML in engineering, social selling in management and computational biology in pharma are the most in-demand skill segments. Complementing this trend, expectations from campus students are pivoting to management consulting roles for MBA specialisation and data scientist for technology talent.

Retention reboot needed

Attrition remains a significant challenge, especially among MBA graduates. Overall, 1-year and 2-year attrition rates for top-tier campuses are 21 per cent, 26 per cent and 28 per cent, in pan-India. These rates are slightly lower for tier 2 and tier 3 campuses at 19 per cent, 21 per cent and 25 per cent, respectively.

This trend underscores the need for innovative retention strategies. To combat this challenge, leading organisations are implementing flexible work arrangements, performance-based incentives and targeted career development programmes.

Neelesh Gupta, Director, Deloitte India, “This year’s study reveals a critical need for organisations to rethink their retention strategies, especially for MBA graduates, where attrition rates are alarmingly high. Innovative practices are no longer optional but essential for retaining top talent in a competitive market. It further reveals that currently, four of every five executives favour decisions on hiring, pay, promotions, etc., based on skills over job history or network, citing reduced bias and improved fairness. Thus, there is a need for educational institutions to equip students with the multifaceted skills to succeed in the digital age.”

Despite higher attrition rates, 70 per cent of organisations actively seek MBA graduates, reflecting their importance in business success and a 5.2 per cent CAGR in compensation over five years. Notably, year-on-year compensation has experienced a decline for the first time in five years across tiers of MBA talent and in the top 10 tiers for M.Tech and B.Tech. This is reflected in a 26 per cent decline in pre-placement offers (PPOs) across degrees and a 33 per cent reduction in campus placement budgets. This shift suggests a focus on a more thorough skills assessment and a strategic reallocation of resources for streamlined hiring practices.

Industry-academia partnerships and Gen AI integration

The report also highlights the increasing importance of Industry-academia partnerships, essential for creating a competitive workforce and fostering a knowledge-based economy. These partnerships facilitate the co-creation of curricula and provide students practical exposure and experiential learning opportunities.

Gupta added, “Gen AI is revolutionising talent management practices by transforming recruitment into a more inclusive, unbiased and skill-oriented process while enhancing productivity and shaping the future of work. Our study reveals that while 60 percent of organisations are exploring the potential of AI/Gen AI, 40 percent have already begun using these technologies to stay ahead in the competitive landscape.”

Advancements in workplace diversity and inclusion

The report underscores significant progress in workplace gender equality and diversity hiring. Female campus hiring increased in FY24 compared with that in FY23. However, the availability of gender-diverse talent remains a challenge, especially in the engineering stream. Rise in various initiatives also supports the hiring of differently abled individuals and those with diverse gender identities. Targets for hiring differently abled employees increased from 5 per cent in FY23 to 9 per cent in FY24, while LGBTQIA+ hiring targets surged from 8 per cent to 20 per cent.

Location preferences diverge

The survey reveals distinct location preferences for different disciplines. For engineering graduates, Bangalore, Hyderabad and Chennai emerge as the top destinations, likely due to their thriving tech ecosystems, prestigious universities and robust job markets. In contrast, for students pursuing management degrees, the top three preferred locations are Bangalore, Delhi and Mumbai. Bangalore's reputation as an IT and start-up hub likely makes it attractive for management students seeking opportunities in diverse industries.