The Signal and the Shortcut

Every year, India produces roughly ten million graduates. Employers – who must screen hundreds or thousands of applications for each role – have long used degrees as a shortcut while sorting applicants. The credential does the filtering before the CV even gets read. However, this shortcut is becoming increasingly less relevant, or even useful. As job requirements evolve with AI and digital technologies transform the workplace, the degree's place as an efficient one-point signal in the hiring process is no longer as secure as it once was. What comes next remains an open question, but plainly, interesting days lie ahead.  

The Degree as a Filter…

For decades, the degree has acted as a filter, on both sides of the hiring relationship. For applicants, it sets a ‘floor’ for the type of employer and pay they might expect post-graduation. (Near-guaranteed placements and attractive compensation packages were all but a given for those passing out of elite institutions.) For employers, it signals a level of familiarity with and proficiency in a given field. More importantly, the degree contains information about the rigour and relevance of the course, and does a basic sorting job in terms of overall competencies. Beyond the obvious brand value, for those coming out of marquee colleges, the degree signals that the candidate survived both, an extremely competitive entry process and a rigorous, highly-competitive program.  Employers can (or rather, could) therefore assume a baseline level of ability, motivation and work ethic. Hiring from elite institutions became an unspoken rule, and felt like a safe bet. 

A system that long seemed to work well is now fraying. In 2024, according to Deloitte's Campus Workforce Trends report, MBA salaries fell for the first time in five years; last year, across 23 IITs, nearly 38% of students went unplaced, the highest ratio in 3 years. 

…is Losing its Power

If the degree's value as a proxy has been weakening, it is because of two distinct sets of forces. At one level, thanks partly to AI, there is a widening  gap between the skills industry needs and what universities produce. A 2025 WEF Future of Jobs report found that 40% of employers expect to reduce staff in roles where AI can automate tasks, which are traditionally the sort of  foundational work junior employees perform: research, first drafts, basic data analysis and routine communication. With AI taking on these tasks, the traditional ‘stepping stones’ and learning pathways for junior employees are beginning to narrow. While it’s too early to guess how quickly these changes will play out, they raise important questions about whether the well-worn pathways into white-collar careers will remain as open in the future.

At another level, with higher education becoming more accessible, millions of graduates are seeking ‘guaranteed’ route to such jobs. This, however, has come with unintended consequences: degree inflation. While workers with degrees aren’t necessarily landing jobs, stiff degree requirements are making it ever harder for workers without them. As graduates flooded the market, employers added degree requirements to roles that had never previously demanded them, even if the underlying tasks remained unchanged. For example, a study by Burning Glass Institute, a think tank, found that only 19% of executive assistants have a bachelor’s degree, yet 65% of job listings now require one.

As a result of ever-rising entry barriers, two things happened simultaneously: many graduates were unable to find suitable work, while many non-graduates were locked out entirely. Neither group could escape the degree filter.

The Rise of Skills-Based Hiring

Skills-based hiring has picked up in the last 10-12 years but only accelerated meaningfully around the pandemic, when labour scarcity came to the fore. Desperate to find skilled talent, employers began to question whether their degree requirements were solving a real problem, or simply gatekeeping. Between 2014 and 2023, according to a study cited in the Harvard Business Review (HBR), the number of roles from which employers dropped degree requirements increased almost fourfold.

However, evidence suggests that removing degree requirements from job advertisements does not automatically translate into more evolved hiring outcomes. The same HBR study found that while many employers publicly embraced skills-based hiring, most continued to hire largely the same share of degree holders, even after dropping formal requirements. The findings suggest that changing hiring practices requires more than altering job descriptions – it requires new ways of evaluating candidate capabilities, and new mindsets.

So far, the shift towards skills-based hiring is concentrated in roles where output is measurable and skills can be tested directly, such as in tech start-ups, in GCCs, or in specific product roles. Here, skills certifications and project portfolios perform the same role that degrees once did, at least in pockets. (It’s a different story in fields like finance and professional services, roles which are technical and harder to quantify.) Employers increasingly prefer graduates who have already gone through relevant training or possess direct experience in the field, rather than putting them through 6 months of onboarding and training. Mini credentials like bootcamps, cloud certifications and AI training now function as viable alternatives.

For similar reasons, many companies are looking beyond the elite universities. Strikingly, one in three employees at companies like Apple and Nvidia in India now come from tier-three colleges.

Are the Liberal Arts Striking Back?

In parallel, as AI reshapes the world of work, employers are rethinking what they expect of their employees. As technology advances, more and more businesses are realising that foundational skills like collaboration, mathematical thinking and adaptability are key to both organisational and individual success. 

In India, where engineering has dominated the hiring culture for decades, often at the expense of the humanities, this is worth taking seriously. A recent study, based on a survey of 100,000+ candidates across 22 industries confirms that the most in-demand capabilities are soft skills, i.e. creativity, critical thinking, communication, emotional intelligence and adaptability. These are typically skills associated with interdisciplinary education like a liberal arts program, and not a more specialised technical course. 

At root, a liberal arts education trains the mind to synthesise information across domains and to assess the information presented critically. A graduate who has studied history, literature, economics and science in tandem develops the ability to see patterns across fields, to anticipate unintended consequences, to communicate complex ideas to non-specialists. These are the capabilities that an AI cannot replicate, and they will continue to retain value in an AI-disrupted world. 

A combination of technical fluency with adaptive, generalist capabilities is what the labour market is starting to recognise, and even reward. The computer science graduate who can code but cannot synthesise or communicate may be less future-proof than the interdisciplinary graduate who can do both. 

While it is still early days, chances are high that, having run up against the limits of degree-focused hiring, and facing growing disruption from AI, more and more employers will choose to take the road less travelled, hiring fewer engineers, more liberal-arts graduates and even (most scandalous of all) a certain number of non-degree holders.