Engineering oversupply: More students headed for graduate education

I discussed in my earlier posting that India is facing a situation of oversupply of engineering graduates not only due to recession which has slowed campus recruitment but also because of the skills gap. Thus, while the demand side equation has slowed, the supply of engineering graduates has increased at a faster pace resulting in a bigger gap and unemployment among engineering graduates. I argue that this oversupply of unemployed and largely dissatisfied engineers will continue to boost the demand for master’s level education in India and abroad.

Fresh graduates from engineering programs have three primary career options:
1) Employment
2) Higher Education – India – M.E./M.Tech. or MBA
3) Higher Education – Abroad – MS or MBA

Premier Indian institutions like the IITs are also facing the brunt of the recession and their placement numbers have taken a dip. For example, according to HRD Minister Kapil Sibal, number of students recruited by MNCs from seven IITs reduced from 3,031 students in 2008 to 1,606 this year. Graduates may be compromising and taking jobs of lesser preference resulting in dissatisfaction in terms of their career goals. This means that they would look for an change in employer or more likely pursue higher education in short to medium term to fast track their careers.

In India, engineering graduates may pursue M.E./M.Tech. or MBA. Number of test takers for graduate level entrance exams like Common Admission Test-CAT for admissions to MBA institutes and Graduate Aptitude Test in Engineering-GATE for admissions to gain admission to graduate engineering programs in India have increased consistently over the years. In 2009, nearly 230,000 students took GATE as compared to 170,000 in 2008 indicating an increase of 27 per cent in one year. Likewise, number of CAT test takers have doubled in six years from a total of 130,000 in 2003 to 250,000 in 2008. It is estimated that nearly 50% of total CAT test takers are engineers and 80% of admits in IIMs are engineers.

Graduate engineering programs (MS) are quite popular among Indian students going to the US. For example, according to NSF Science and Engineering Indicators, nearly 38,000 students from India were enrolled in graduate programs in Computer Science/Engineering, representing nearly 57% of total enrollment of Indian students in US universities in 2005.The popularity of MS programs among Indians is driven by the availability of assistantships and relatively higher availability of technology jobs post-graduation. MBA programs, although highly aspirational are limited by requirement of work-experience and lesser availability of financial aid and jobs post-graduation.

Enrollment pattern of Indian students in US universities clearly indicate that it is the preferred destination for higher education among Indian students. According to IIE OpenDoors, most of the Indian students enroll at the graduate level (72.0% at graduate level as compared to14.4% at undergraduate level). Number of Indian students enrolled in US universities have grown by 180% in ten years and more than doubled its proportion to total foreign student in US from 7% to 15% (IIE OpenDoors).

Year     # of Students from India    % of Total Foreign Students in US

2007/08     94,563     15.2%
1997/98     33,818       7.0%

To sum up, the confluence of oversupply of engineers, lesser availability of satisfying jobs and natural aspiration of Indians for US would continue to create high demand for graduate level programs in India and the US. Although, CGS numbers report that number of Indian applications are down by 12% from last year, Indian prospective student still aspire to study in the US.

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