If you notice, this is not case just with IIT graduates. It's the story of majority of engineering graduates. There are no core engineering jobs in India (other than IT). Everyone is thus forced to take up service sector jobs.
One, it's not the mistake of engineers. The real reason is the structure of economy.
Two, it's not case just with IIT engineers. It's the story of majority of engineering graduates in India suggesting that structure of economy is the major driving factor, not the individual preferences.
Three, using narrow metrics of value addition of different branches of engineering to the particular related sectors of engineering is incorrect. We must use the over all value add to the economy.