The rise of artificial intelligence (AI) is reshaping the job market, bringing both opportunities and risks—particularly for young job seekers in India. While AI-driven automation has allowed companies like fintech giant PhonePe to reduce their customer service teams by 60% over five years, the impact on fresh graduate hiring is even more pronounced.

According to SignalFire’s State of Tech Talent Report 2025, hiring of fresh graduates by large tech firms in 2024 dropped by over 50% compared to 2019, with start-ups cutting hiring by more than 30%. Tightening budgets and advancing AI capabilities are cited as primary reasons for these declines.

Youth unemployment statistics reveal harsh reality

The latest Periodic Labour Force Survey from India’s statistics ministry shows unemployment for 15-29-year-olds at a troubling 13.8% as of April 2025—more than double the national average of 5.1%. Longer-term trends from the Centre for Social and Economic Progress indicate stagnation or decline in youth employment over decades, despite recent marginal increases.

Challenges in learning and digital proficiency

Young Indians are spending less time on learning activities—422 minutes per day in 2024, down 8 minutes from 2019. Despite widespread internet access (84.2% in the 15-29 age group), only around 28.5% can perform basic digital tasks such as online banking, emailing, and information searches. Even urban youth proficiency remains below 50%.

Closing doors for fresh graduates

While AI improves efficiency by automating repetitive tasks, it limits entry-level opportunities crucial for fresh graduates to gain experience and advance. This “bottom rung” job reduction hits youth hardest, shrinking their pathway into the workforce.

Reflecting global trends, Indian youth mirror US Gen Z’s declining job confidence, with scores significantly lower than older generations, underscoring rising anxiety about their economic future.

Key takeaway: As AI continues to transform industries, India’s youth face a dual challenge—shrinking job openings and the urgent need to upskill for an increasingly digital and automated workplace.