AI is cutting into the entry-level tech jobs that engineering graduates in India have long depended on, and the head of the country’s largest software trade body says the education system is not moving fast enough to respond. Rajesh Nambiar, president of the National Association of Software and Services Companies (Nasscom), has warned that students could enter the job market with skills that are already out of date.

In an interview with Nikkei Asia, Nambiar said AI is already changing what companies expect from their staff. Tasks such as basic coding and software testing, which have traditionally given freshers their first opportunities, are increasingly being automated. He said that creates real difficulties for new graduates until the IT industry adjusts to the new business environment.

“From a fresher’s point of view, it is a concern, (and) I will not sugarcoat it any differently,” Nambiar told Nikkei Asia. He was blunt about the risk to students. “If our education system is unable to make that transition very quickly, students will come out with skill sets which may be very obsolete already.”

Why this hits so hard in India

Technology careers have long been seen as one of the surest routes to a well-paying job in India, and the numbers behind the pipeline are enormous. The country had 5,903 engineering and technology colleges in the financial year ending March 2026, with enrolments close to 2.6 million, according to official estimates.

Jobs have not kept pace with those graduates. Azim Premji University’s estimates show the number of unemployed graduates nearly quadrupled to around 11 million between 2004 and 2023. Any tool that removes entry-level work now lands on a population that was already struggling to find a foothold.

Nambiar believes the curriculum for computer science and engineering needs a major rethink. “The level of transformations required in the curriculum has never been this significant,” he said. The stakes are clear for anyone choosing an engineering degree today: the skills taught in a four-year course may not match what employers want when students graduate.

The government has started responding

The government has begun introducing AI education initiatives, including teaching the subject to children as young as eight. It has also launched an online repository of courses covering AI, data analytics and cybersecurity. According to the government, 1.3 million people have received course completion certificates through these programmes.

Whether those courses reach the students who need them most, and whether they match what companies will hire for, remains the open question. Nambiar’s warning suggests the timeline is tight.

The bigger problem is the IT services business model

The challenge for fresh graduates is part of a larger upheaval in India’s IT services industry. For years, software companies earned a large share of their revenue by deploying big teams to manage technology infrastructure and handle routine IT operations. AI tools are now taking over some of that work, and the traditional model is under pressure.

The effects are already visible at the country’s biggest firms. Tata Consultancy Services (TCS) reported sequential revenue growth of just 0.5 per cent in the July-September quarter, its weakest performance in three years. Infosys lowered its revenue growth forecast for the financial year ending March 2027 to 1-2 per cent, down from its earlier estimate of 1.5-3 per cent.

Nambiar said companies will need to move into newer areas such as cybersecurity, AI consulting, and AI implementation and maintenance to make up for lost traditional services work. He also pointed to a shift in how clients pay. They increasingly want to pay for the results a project delivers, not for the number of people assigned to it. That change weakens the old link between headcount and revenue.

Signs of growth, and a warning to incumbents

There are early signs the new work is paying off. TCS reported a 19 per cent rise in annualised AI revenue to $3.1 billion. Infosys said its AI revenue grew 29 per cent quarter on quarter in the September quarter.

Nambiar described the current phase as a period of “rebalancing,” which he expects to continue until new AI-related business replaces the revenue lost from older services. He expects the transition to be difficult but says the long-term outlook for the industry remains positive. Not every company will make it through, though.

“There is very little doubt about (survival of) the industry, but (it’s) more to do with the underlying companies,” Nambiar said. He estimates that 80-85 per cent of businesses will survive.

He also had a message for companies that are comfortable with how they have always worked. “You need to disrupt your own business, otherwise you’re not going to get into the new world,” he said.

What this means for engineering students now

For students and early-career engineers, the message is direct. The entry-level coding and testing roles that once served as a starting point are shrinking, and the skills that replace them are still being defined. Nambiar’s advice points toward cybersecurity, AI implementation and the ability to work on results rather than routine tasks. Students who wait for the curriculum to catch up may find the window for their first job has already narrowed.