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A study by Federal Reserve Bank of New York says work from home, rather than AI, may be responsible for employment struggles faced by college graduates since the pandemic
Some companies say that training freshers remotely is simply less efficient than hiring someone who already possesses the required skills.
For the past two years, artificial intelligence has been cast as the villain behind shrinking job opportunities, or hiring freezes. But a new study from the Federal Reserve Bank of New York suggests that remote work could be a hindrance for young graduates to get jobs.
The study argues that work-from-home arrangements, rather than AI, may be responsible for a significant portion of the employment struggles faced by young college graduates since the pandemic. Researchers estimate that remote work explains nearly 64% of the increase in unemployment among graduates under the age of 29 within the US.
But is India impacted by this shift? Let’s find out.
Remote Work May Be Hurting Freshers More Than AI
The New York Fed researchers found that industries with a high concentration of remote work have become less willing to hire inexperienced workers. The reason?
Junior employees often require close supervision, on-the-job training and informal mentoring. These are much easier to provide when people work together in an office.
In remote environments, managers may find it harder to monitor progress, answer quick questions or provide hands-on guidance. As a result, many companies appear to be favouring experienced professionals who can work independently from day one.
The study found that unemployment among younger graduates in remote-friendly occupations increased by about one percentage point in the post-pandemic period, while unemployment among older workers in the same occupations actually declined.
Separate research examining hiring patterns across the US, UK, Canada and Australia found that occupations with high work-from-home potential experienced a 4-5% larger decline in junior hiring by 2025. In the US, entry-level hiring was down roughly 29% compared to pre-pandemic levels.
“Hiring practices are changing in favour of those being able to work with less supervision than those needing more supervision,” said Kanishk Agrawal, CTO at Judge Group, India.
The availability of informal learning, mentoring and hands-on experience to assist new or entry-level staff has been reduced due to the shift to remote work, he added. As a result, many employers are increasing the criteria for hiring entry-level staff and placing “greater weight on candidates who possess previous experience, or internships, and job-ready skills, as opposed to simply hiring new recent graduates.”
Is India Seeing The Same Problem?
India’s job market presents a similar puzzle. The country produces five million graduates a year, and is positioning itself as a global AI and technology hub. Yet educated youth unemployment remains stubbornly high.
Various estimates suggest that India’s youth unemployment rate remains around 16%, significantly higher than overall unemployment levels. Some studies indicate that nearly 67% of unemployed young Indians are graduates, representing roughly 11 million people.
The increase in youth unemployment in India is primarily due to structural issues such as not creating enough jobs, informality in the labour market, and lack of training through vocational institutions,” saidKumar Rajagopalan, Vice President, Strategic Initiatives and Country Head India at Dexian Businesses. “There is an accelerating rate of change in some occupations due to AI but it can be thought of as an adjunct problem. The bigger issue facing employers and their workforce is the skills are not aligned to the requirements of the current job market.”
According to staffing firm Xpheno, demand for professionals with up to two years of experience fell sharply in May 2026. Entry-level technology openings dropped to around 10,000 compared with approximately 13,000 a year earlier, representing a 44% year-on-year decline.
Campus placements have also weakened at many engineering colleges. While companies continue hiring experienced professionals, entry-level opportunities have become increasingly competitive due to other factors like global economic uncertainty, AI adoption, and geopolitical disruptions.
Rajagopal points out that in 2026 companies are focus on hiring “high-quality applicants” instead of hiring a lot of applicants. Sectors like AI, cybersecurity, engineering services, fintech, GCCs, and deep-tech will all create new career opportunities. However, companies are assessing applicants more closely and giving more weightage to those who could solve problems and adapt instead of just educational qualifications, he said.
Why Freshers May Be Losing Out
Many sectors in India have for years relied on an apprenticeship model. Fresh graduates learned from experienced developers, analysts, consultants and managers in office. Much of that learning happened informally through observation, spontaneous conversations and day-to-day collaboration.
But remote work disrupted these interactions. Questions that would take two minutes to answer in person may require multiple messages, calls or meetings online.
As a result, some employers may conclude that training freshers remotely is simply less efficient than hiring someone who already possesses the required skills.
Most industries are currently operating this way, stressed Agrawal. There is so much uncertainty in today’s economy, and challenges in rapidly changing technology that many organisations prefer to hire experienced people who will be able to quickly increase the productivity of their company.
Thus, hiring experienced employees allows organisations to save up on the training and onboarding costs. However, “organisations, which have long-term talent development strategies, are continuing to invest in new hires through structured graduate and/or apprentice-type programmes, Agrawal pointed out.
Meanwhile, Rajagopalan says businesses are “more than ever” facing pressures from stakeholders to “generate efficiencies and profitability”. This is why, experienced workers are so “attractive to employers”. “They can add value right away. While entry-level hiring is still the best way for companies to build their future talent pools, many are now being very selective in hiring recent graduates and focusing on applicants who are already demonstrating the skills and certifications that are needed to be successful in their respective industries.”
Why Companies Are Calling Employees Back
Across India’s technology sector, consulting firms and start-ups, many employers have increased office attendance requirements over the past two years.
The rationale is not always about productivity. Increasingly, companies are arguing that physical workplaces remain important for collaboration, innovation and employee development.
A recent workplace report cited by The Economic Times found that hybrid work is likely to remain the dominant model, but career growth will increasingly depend on what happens during intentional office days. Employers are placing greater emphasis on mentorship, team-building and learning opportunities that are difficult to replicate virtually.
Many executives now view office attendance as particularly important for younger employees who are still building professional skills and networks.
Is Hybrid A New Compromise Between Flexibility And Training?
The debate is no longer simply about whether employees should work from home or return to the office full-time. Instead, many organisations are searching for a middle ground.
Hybrid work offers flexibility while preserving opportunities for training and collaboration. It allows experienced professionals to maintain autonomy while ensuring fresh graduates receive the mentorship and exposure they need.
“For young employees, regular face-to-face interaction is completely irreplaceable. Thus, for employers, the hybrid model strikes the perfect balance; it retains the geographical talent pool and flexibility of remote work. It restores the collaborative environment required to safely onboard and groom fresh talent,” said Ankush Sabharwal, CEO and Founder, CoRover ai.
As organisations redesign their workforce strategies, hybrid structures will be a “non-negotiable standard” to sustain a “healthy entry-level talent pipeline”, Sabharwal added.
About the Author
Shilpy Bisht is a News Editor at News18, where she leads the English app operations. She writes on world affairs, health, AI, career, business, and issues affecting women and children. A former print …Read More
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