AI hiring slowdown may hit Indian engineering freshers: Anthropic report

Anthropic's AI labour market report shows declining hiring of young workers in AI-exposed roles. Experts warn the trend could pressure India's engineering graduates

Over the weekend, Anthropic came out with a report on the impact of artificial intelligence (AI) on the labour market. The report, while mapping jobs that will likely be the most impacted due to the rapid pace of AI adoption, also introduced a new measure it called 'AI displacement risk'.

 

While the report was based on data from the US, there is, nonetheless, one point that could be of concern for India, which graduates lakhs of engineers annually.

 

What does the Anthropic report say about young workers? 

The report tackles the impact of AI on young workers, which could potentially apply to engineers passing out of Indian campuses. “Brynjolfsson et al. report a 6–16 per cent fall in employment in exposed occupations among workers aged 22 to 25. They attribute this decrease primarily to a slowdown in hiring rather than an increase in separations,” the report noted.

 

This means that young workers in AI-exposed occupations are being hired at lower levels. The report also notes that when looking at hiring directly, data show that since ChatGPT's launch, the rate at which young workers enter AI-exposed jobs has fallen by roughly 14 per cent, while hiring into less-exposed roles has stayed steady. This trend is not seen in workers over 25.

 

Why could Indian engineering graduates be affected? 

For students studying engineering in India, this could be a matter of concern when they graduate. HR experts point out that students from Tier-III and Tier-IV cities will be impacted the most, and stress that these students should focus on internships and additional courses in AI.

 

Srinivas Padmanabhuni, chief technology officer (CTO) at AiEnsured, said that the Anthropic report confirms something many in the AI research community have been watching closely for the past two years. “The signal around young workers, specifically the 22 to 25 age group, is perhaps the most concerning finding in the entire paper," he said. "What Brynjolfsson et al. are documenting is not a wave of layoffs. It is something quieter and in some ways more troubling: companies are simply not opening the door for fresh graduates the way they used to, particularly in exposed occupations like software development, customer service, data entry, and paralegal work."

 

This matters enormously for India. A large share of the country's undergraduate output, especially from Tier-II and Tier-III engineering colleges, has historically fed into entry-level roles. If hiring is slowing in these categories globally, that pipeline will come under real pressure.

 

However, Padmanabhuni also points out that the same report shows that AI currently covers only 33 per cent of tasks even in the most exposed category: computer- and math-driven occupations. “We are nowhere near the theoretical ceiling of displacement. But the trajectory is clear, and the pace is accelerating,” he said.

 

How should colleges and students respond to the shift? 

The bigger question, though, remains: How do colleges handle this shift and make engineers more employable?

 

S Pasupathi, chief operating officer (COO), HirePro, a Careernet Group company that works with several corporates on campus hiring, believes that rather than disappearing, entry-level jobs are becoming more specialised, and the transition from college to corporate is expected to accelerate.

 

“Graduates from top institutions like IITs, when they join large tech or consulting firms, they are typically operational within weeks — not months — largely because they've been doing internships since their second or third year. Graduates from smaller colleges, however, often expect more structured onboarding and hand-holding,” he pointed out.

 

Pasupathi also highlights that students should ideally begin internships or additional courses by their third or fourth year of college, so that they can quickly move into operational roles instead of spending their first six months learning on the job.

 

Anil Ethanur, co-founder of specialist staffing firm Xpheno, says that the sustained visible drop in the trajectory of fresher intakes in occupations with high AI exposure is a point for freshers and academicians to take cognisance of.

 

“Talent, freshers and experience alike, should note that sectors and occupations with low-to-no AI exposure cannot compensate as a direct alternative to move towards. Low-complexity entry-level roles with rule-based actions are among the first to get impacted by AI. It is hence important for freshers to gather skills that can open avenues in roles that are higher up the complexity curve for execution,” he noted.

 

According to HR experts and industry players, everyone needs to adopt a learning attitude, irrespective of where they are in their professional journey.

 

Padmanabhuni says his message to graduates and to institutions training them is: “AI will not replace you. But someone who knows how to work with AI, audit it, improve it, and take accountability for its outputs, that person will. The report gives us early data. The response has to come from how we redesign education and skilling, starting now.”

 

What is the outlook for fresher hiring? 

The state of fresher and entry-level hiring continues to be under stress as industries attempt to stabilise their talent plans and costs. “Employment opportunities for freshers, irrespective of the institution & qualification pedigrees, have been hindered by sluggish hiring markets over the last three-year period. Margin pressures amid challenges in key buyer markets continue to impact hiring plans for entry-level talent among enterprises. Further, with the threat of AI replacing entry-level roles and functions, the current drop in fresher & entry-level intake is here to stay for a few more cycles. The current outlook for FY27 and FY28 is a status quo on the lowered level of fresher opportunities and absorption,” added Ethanur.