India’s Graduate Skill Index 2025

In an era where technological advancements, particularly artificial intelligence (AI), are reshaping industries at a fast pace, the job market is undergoing significant transformation. The potential obsolescence of traditional skills due to AI-driven productivity is a common concern. Therefore, it is crucial to comprehensively assess the employability of Indian graduates for the right skills to build the future workforce.

The second edition of the report on the employability of Indian graduates, India’s Graduate Skill Index 2025, published by Mercer | Mettl, arrives at a pivotal moment as AI continues to transform industries and redefine job roles. This edition refines its methodology to better fit the needs of the Indian graduates in the job market, ensuring that the insights provided are both relevant and actionable.

As businesses continue to leverage AI to enhance efficiency, improve customer experiences, and drive innovation, Indian industries are positioning themselves as a key player in the global AI landscape. This boom presents opportunities for economic growth and underscores the need for a skilled workforce capable of harnessing the potential of AI technologies.

The IndiaAI mission, launched by the Indian government with a budget of Rs.10,371.92 crore, aims to foster AI innovation across the country. The mission encompasses several key components aimed at creating a robust AI ecosystem in the country. IndiaAI compute capacity, innovation center, application development initiative and datasets platform are the key components of the mission aimed at fostering the vision of Making AI in India. Moreover, the IndiaAI future skills program aims to expand AI education and establish data and AI labs in Tier 2 and Tier 3 cities, nurturing the aspirations of Gen Z students.

Consequentially, identifying and assessing graduates with the right skills becomes crucial for industries to build a competent and adaptable workforce. By focusing on the relevant skills, such as data analytics and AI proficiency, graduates can contribute effectively from day one. Meanwhile, strong soft skills—such as communication, teamwork, learning agility, etc.— enable graduates to interact better with AI and navigate complex workplace dynamics.

According to Mercer | Mettl’s findings, the overall employability of Indian graduates has slightly decreased to 42.6% in 2024 from 44.3% in 2023. The decline is primarily driven by a drop in employability for non-technical roles, while employability in technical roles has seen an increase. 46% of graduates are now employable in AI and machine learning roles, reflecting a significant increase in proficiency in these technical skills.

• Male graduates exhibit a marginally higher employability rate of 43.4% compared to 41.7% for female graduates, indicating a balance of competence across the two genders.
• Graduates from Tier 1 colleges demonstrate the highest employability rates at 48.4%, followed by Tier 2 colleges at 46.1% and Tier 3 colleges at 43.4%. This variation highlights the need for institutions to improve educational quality and align curricula with industry demands in both technical and non-technical roles.
• Delhi, Himachal Pradesh, Punjab, and Uttarakhand demonstrate higher employability rates, while Uttar Pradesh, West Bengal, Assam, and Telangana also rank among the top 10 states.
• With an overall 50% employability, there has been a great emphasis on the increasing demand for soft skills, with communication, critical thinking, and leadership being the most sought-after attributes. However, there remains room for improvement in creativity. As AI continues to reshape the job market, employers prioritize candidates who can collaborate effectively, think critically, and demonstrate high learning agility.

The report methodology assessed data collected from over 2,700 campuses and 1 million learners from 30+ states and union territories. This extensive analysis ensures a robust and reliable foundation for the report’s findings.

India’s Graduate Skill Index 2025 report serves as a critical resource as it can help organizations and academia enhance their workforce development strategies significantly.

• By utilizing the insights, employers can refine their hiring processes to focus on the specific skills and competencies that are in high demand, ensuring they attract candidates who are not only technically proficient but also possess essential soft skills.
• Educational institutions can align their curricula with industry demands, ensuring that students acquire the job-specific skills as well as soft skills that employers are seeking.
• Institutes can leverage the report to design targeted training and development programs, workshops, and extracurricular activities that focus on enhancing critical thinking, communication, and leadership abilities among students.

By actively engaging with the findings of the report, organizations and academic institutions can improve their training programs and offerings, respectively, and contribute to producing a workforce that is well-equipped to meet the challenges of an AI-driven economy.

As organizations adapt their strategies and embrace digital transformation, the demand for skilled graduates is expected to rise. While the prospects for graduates appear promising, the path to success in an AI-driven and hyper-connected workplace is fraught with challenges. In 2023, India experienced a notable slump in volume hiring for graduates, primarily due to a slowdown in the IT industry, which traditionally recruits thousands of graduates annually. Following a hiring boom in previous years, major IT companies have had to reduce their headcount in response to a conservative client market in the West, inflation, high interest rates, and various other geopolitical factors.

However, industry experts anticipate a promising turnaround in the future as companies prepare for a hiring spree, signaling a revival in demand for entry-level talent. This shift presents a valuable opportunity for graduates to capitalize on the evolving landscape and secure their place in the burgeoning AI market. Encouraging signs of growth are already emerging, highlighting a bright outlook for new entrants in the industry.

Undoubtedly, a systematic approach to skill assessment can help organizations identify potential gaps in their workforce and hire the right talent. This proactive strategy not only improves employee performance but also fosters a culture of continuous learning, ensuring that the workforce remains competitive in a rapidly changing environment. Ultimately, aligning graduate skills with industry requirements is essential for driving organizational success and maintaining a robust talent pipeline.