Myth of meritocracy, caste-based disparities in IT sector Premium

As the IT sector grows in India, it fails to address or even acknowledge the social barriers that exclude marginalised groups

India’s IT sector is one of the fastest growing industries in the country, contributing over 7% to India’s GDP, so much so that the sub-Saharan African countries look to follow its lessons to replicate India’s success in software exports. The performance-driven and high-paying nature of jobs in the IT sector make it a preferred career destination for millions of Indian youth. The job market in this industry is often touted as the epitome of skill-based meritocracy and inclusivity, with the social backgrounds of candidates playing no role in their hiring.

However, an empirical test of the inclusivity-promoting image of IT reveals a different reality. Analysis by the writers of this article based on household surveys by the National Sample Survey Office (NSSO) unravels stark caste-based disparities in employment probabilities and wage earnings in the IT industry, indicating that social inequalities are significantly alive in the job market.

The study utilises two rounds of NSSO surveys: NSS 78th (2020-21) and NSS 68th rounds (2011-12), which are representative at the national level. The study’s sample comprises 29,289 individuals, with 20,437 drawn from the NSS 78th round and 8,852 from the 68th round for India. The variation in the selected sample size from the two periods is due to the variation in the overall sample covered under these surveys. The employment probabilities were estimated after controlling for observable factors that could influence the outcome variable. Industries that are dominated by the public sector were used as the benchmark in the probability estimation.

The study finds that the probability of Scheduled Castes (SC) and Scheduled Tribes (ST) to be engaged in the IT sector is only 10% in comparison to upper castes (27%). The finding remains robust even after accounting for differences in educational attainment and other individual characteristics such as gender and regional background (rural and urban). Surprisingly, this disparity in employment probabilities has increased over time from 2011-12 to 2020-21, though both caste groups were at a relatively disadvantaged position in the first time period than the later period. In 2011-12, lower caste groups faced only 6% probability of being engaged in the IT sector as compared to 17% for upper castes. Thus, while the overall employment probabilities for engagement in the IT sector increased for both caste groups, the deficit of lower castes went up from 11% in 2011-12 to 17% in 2020-21. This suggests that as the IT sector grows, it fails to address or even acknowledge the social barriers that exclude marginalised groups.

The study also reveals that even when lower caste groups manage to enter the IT job market, they face labour segmentation as reflected in caste-based disparities in wage earnings. SC and Other Backward Classes workers in the IT sector face negative wage differentials of 24.9% and 22.5%, respectively, as compared to upper caste workers, even after accounting for differences in educational attainment and type of employment (regular verus temporary).

These findings align with the labour market segmentation theory, which predicts a division of the labour market into dualistic segments (lower and upper labour segments), with workers in the lower segment facing structural barriers in upward mobility. The findings indicate that lower castes are relegated to the lower segments of the job market, facing limited returns to private investments in education and skills.

The labour market disparities in IT also affect other vulnerable sections, especially women. Female workers in IT earn 26.2% lower than males, irrespective of their caste, though their employment probabilities are closer to that of men. Labour market segmentation, particularly in a high-growth and high-paying sector such as IT, has far-reaching socio-economic implications. By systematically excluding a significant portion of the population, the industry not only sacrifices economic efficiency but also undermines social justice.