Most probably, it is because the Mic is not set as the ‘Capturing device’ in alsa.
So first check, whether your mic and sound recording is working.
Alsa comes with a program to record voice. Plug in your mic and do a,
arecord -vv -d 10 test.wav
speak something and it should get recorded. the -vv option shows a VU meter of your recording sound.
Now try to play it,
aplay -vv test.wav
If you hear it back, then your mic is properly working and sound recording is fine.
Then it should be a problem with Skype.
If not, as in the case with me, You will need to mess with alsamixer.
Start alsamixer in a new terminal
alsamixer
Press tab to go to ‘Capture’, This will list all the capture related stuffs. Pressing tab cycles between view modes like Playback, Capture and All.
Now, there will be items like Mic, Mic boost, Capture, Line, CD, Digital, Aux etc etc. Some of these devices will have a text called Capture written in red at the bottom of the volume bar. This is called Capture flag and this enables the recording on the device.
Make sure you have Capture flag set on the devices Capture, and Mic. You could do this selecting the correct item(by Left/Right arrow keys] and by pressing space. When I checked mine it was incorrectly set on ‘Line’ only.
Also make sure you have max volume in in Mic boost, Capture and Digital.
Now try recording, again.
If things work you could adjust the volume levels properly.
Also you can mute your mic so that sound is not produced by your speakers when you use Mic. Do this by going back to Playback [by pressing tab again] and selecting Mic and by pressing ‘m’. You will see a ‘MM’ if a device is muted and ’00’ if its not.
Retry with Skype again and do the test call again to see if there is any change.