Many of the top technology companies have a six month internship program (generally, in addition to their summer internship programs). However, they often draw a blank when they try to recruit students for that. And the reason is simple. Most universities wouldn't allow the student to take a semester off during the normal course of the program. And even if the universities were liberal, most students (and parents) wouldn't want to graduate a semester late. To me that is a very short-term thinking.
A summer internship is good if you want to be exposed to the work environment of an industry, know what kind of things they are doing, what kind of culture they have, and may be just help a little bit to the group you were part of. The company either looks at it as their social responsibility and in such cases does not invest too much of their resources to make it really worthwhile experience for the student, or looks at it as an opportunity to find more about the students so that a pre-placement offer can be made to them. So they save the cost of recruitment, the attrition in this group is likely to be low (since most campuses will not allow students with PPO to sit in interviews for other companies), and the chances of a poor hiring are low, since they have been able to judge students over a long period of time as opposed to a couple of hours in a campus placement scenario.
So, summer internships are useful to both sides to some extent. However, the value of summer internships is limited on both sides. While it helps the companies to recruit later on, they any way have to go through the process of recruitment for finding interns. The only difference is that they can be a bit more relaxed, since it is possible to say no to them after the internship.
It is obvious that a longer internship would be of value to the companies, since in such a case, they can ask the student not just to understand everything and learn things, but also contribute significantly to whatever they are doing. This way, not only they get to judge the student over a longer period of time and hence reduce the errors of recruitment, but get a value for their investment right in those six months. For the student, it can be a life changing experience to work on something that will directly impact a company's business in some way. The quality of six month internship would usually be far higher than that of summer internship. And if the student's interests and skills are in fit with the company's needs, the probability of landing a job will also go up substantially. Even if the student does not get a job offer, the experience of working in a top technology company and working on a live project that had impact on the business would be valued very highly by other companies and that should help in securing a job with anyone else.
So a long term (6-month) internship appears to be a win-win situation on both sides.
But what about the delayed graduation. Well, the way I look at it is the following:
Whether you study for 8 semesters and then do a 1 semester job or you study for 5 semesters, work for one semester, and then study for 3 more semesters, in both cases, after 9 semesters, you have reached the same point in your career path. In addition, because of that industry experience, your learning in the remaining 3 semesters would be enriched. You would know where the things being taught to you could possibly be applicable in real life. You will not just do a passive learning but at all times thinking of possibilities and opportunities. And you are better prepared for a high quality job.
By the way, these six months internships need not be in top companies only. If you are considering higher education and research as a potential career, then spending six months in a great research group would be equally valuable. You would be able to get some publications that would definitely help in getting admissions in top places for PhD, and your application would be strengthen by letters of recommendation from the researchers you worked with. And it is easier to get funding for six months work than for 2 months summer internships.
If you look at students in top universities outside India, this model appears to be quite prevalent. Students take off for not just one semester, but often even 2-3 semesters to gain industry experience and some money so that you can live comfortably in that hostel. The problem in India unfortunately boils down to, "whether I can explain this to all my neighbours and relatives." What will they think. When they see me in college in the 9th semester, will they think that I failed, or will they be convinced that what I have done is good for my future. And unfortunately, people who did their study in minimum period of time are not likely to appreciate the value of such internships. And therefore, you won't be able to convince them.
Convince yourself. And if you are convinced, and your university allows a break, go for it. Don't worry about your relatives and neighbours. They are not responsible for your career.
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