Why do Indian IT companies hire thousands of freshers with little/no technical CS knowledge and invest millions in training them while they can get their job done by hiring a handful of skilled people from a relevant academic background?

Billing is per head. Their goal is to bill more seats and necessarily make the most effective. Hope their attitude changes with clients asking more for fixed price contracts. Even if they hire freshers they really need to increase training on softer aspects that's the only way we can move up in the value chain.

As we know we can mould a person to become a good human being only when he is a child as whatever learnt during childhood remains forever with you. Similarly IT companies are following the same trend. If you hire a fresher you can train him/her into whatever technologies you wish to.   Also the fresher will never negotiate on the salary package. He/ She will be happy in whatever their starting package would be unless and until its very less. If a professional / experienced person is hired they will cost more than a fresher. But in todays world getting a job just after completing your studies has become more important. Its comparatively easier to compete with 4000 people during campus / Joint placements than competing with 4000000 people in the outside world.

Its cheaper to train a thousand employees than to lose a few experienced employees to your competitor. The Indian job market is very competitive and is a challenge for employers to retain employees. With high attrition rates and hard to find experienced professionals for the job, it makes sense investing money in training fresh graduates. Fresh graduates are easier to find, train and retain. A few of these fresh graduates will perform exceptionally well and will grow within the organisation and eventually replace senior employees. A majority of the remaining fresh graduates you hire will be either poached by your competitors, leave within a year or fail to perform. And its worth investing money to find these few employees who will remain loyal to the company. It's a contingency plan for most employers but I know a few who hire to increase FTE count to charge their customers.

One point which I wish to add is they are available at a cheap rate. Yes, count the number of engineering colleges in the states of uttar pradesh, kerala, tamilnadu etc. and compare their qualities of education provided to engineering graduates with international standards. IT companies get cheap talent and train them in a way which suit them  best. Many people realize their potential, switch to better companies or  evolve in some other way like higher studies but most stay on. On the other note, CS guys with good knowledge will not join these companies because of factors like compensation and type of work. On the question of people with non-CS background, the training is inclusive enough to get the work done as most of the projects will be in IT service sector. It will not involve product development from scratch like an OS or designing a new algorithm for solving some computing problem. As an exception, some companies will have R&D labs and they will hire sophisticated talent at a very good package. One more reason is focus on consultancy and other engineering sectors. Many graduates of other engineering/medical branches work as domain expert and help building better software or providing better services to the client. This trend has recently started as Indian IT companies are shifting from core technical services from business consultancy coupled with IT. And as I have experienced, in IT services industry; business of client matters much more than having very high expertise in technology or coding. A working knowledge of the technology is more than enough for handling the technical work.

I don't think they invest millions on training. It's always cheaper to hire freshers than to hire experienced one. And when they hire fresher they get bond signed for 1/2 yrs. Many freshers continue to stay in same company even after finishing their contract. So in long run companies are in profit. Big challenges in hiring experienced once are they demand more pay and there is no guarantee on how long they will stay with company.

A fresher is like a monkey or a dog...you feed him little and he will be ready to do anything  at any time without complaining.Most of the GETs do not know their actual value until and unless they have served the organization for at least 2 years.This is something that any company wants to achieve .Young enthusiatic low salaried slaves.Experienced employees know every hickups and wont be that easy to manipulate. Also the salary required will be more. When you don't do extra work they say you have lots of bad attitude.While on the other hand your friends  screw you by saying that you are unnecessarily working hard like a donkey.It is a difficult situation to handle.Telecom vendors like huawei and ericsson are very famous for these scenarios.