Overall, 68 of the 166 NZ departments ranked were rated in the top 100 for their subjects, down from 74 last year.
Based on the number of top-50 departments, New Zealand's university system as a whole slipped from 14th place last year to 18th.
QS research director Ben Sowter said NZ universities slipped behind on "employability" - a ranking based on a survey of 42,000 employers worldwide on how they regard graduates from each university department.
"Though the number of NZ university departments achieving top scores for research has increased slightly year-on-year, the number achieving top scores for our employability indicator has slightly decreased," he said.
Universities NZ chief executive Chris Whelan blamed the poor NZ results on inadequate funding of the local universities.
"Students in Australia are funded at around 27 per cent more per student than those in New Zealand; students in Canada 60 per cent more; in the UK 73 per cent more; and in the US around 97 per cent more," he said.
"The Government needs to reverse the funding policies of the past 20 years that have seen funding per student decline in real terms."
He said the rankings "strongly influence decisions being made by students, as well as countries, top researchers and research institutes about who they will, or won't, study or work with".
"New Zealand can't afford to have successive governments continue to let this slide."
Number of top-50 subjects
University of Auckland: 13
University of Otago: 2
Massey University: 2
Victoria University of Wellington: 2
Auckland University of Technology (AUT): 1
Waikato University: 0
University of Canterbury: 0
Lincoln University: 0