It was in college that Subhadeep Mondal decided what he wanted to do with his life. All he needed was a good management degree and he would be well on his way to realising his corporate dream. The Commerce graduate from the prestigious St. Xavier’s College, Kolkata, enrolled at the International School of Business and Media (ISB&M); a decision he would live to regret. ISB&M is a school of repute, with campuses in Pune and Gurgaon, and even though the Kolkata campus wasn’t recognised by the All India Council for Technical Education (AICTE), Mondal thought that the institute’s reputation and placement promises were good enough. “In the first few months itself we were told that the institute would get AICTE approval very soon. We were guaranteed placements with salaries to the tune of Rs 5.5 lakh. But ultimately not everyone got jobs through placements and when we tried for jobs off-campus, we were rejected for not having AICTE approval. It was a traumatic experience,” said the 26-year-old who paid Rs 6.25 lakh for the two-year non-residential course. Mondal’s story is a familiar one. With young Indians itching to become suave, jet-stepping corporates, the number of students making a beeline for business schools has increased exponentially. While the demand for Masters in Business Administration (MBA) graduates hasn’t ebbed, a recent report by the industry body Associated Chambers of Commerce and Industry of India (Assocham) found that only a negligible number of students were actually employable. What was even worse was that several management schools were found to be on the verge of shutting shop.
India has at least 4,500 B-schools in operation now, but including unapproved institutes could take that number much higher. The Assocham report says that only 10 per cent of the MBA graduates are actually employable. Around 180 B-schools shut down last year in cities such as Delhi-NCR, Mumbai, Kolkata, Bangalore, Ahmedabad, Lucknow, Hyderabad, Dehradun, etc. And at least 160 more are expected to wind up in 2013. From 2009 to 2012, campus recruitments have gone down by a whopping 40 per cent, says the Assocham report.
ISB&M, Kolkata, for instance, is struggling to survive. In 2009, they had at least 180 students in their management course. In 2012, they could barely manage 32. “The biggest reason for the gap is the rapid mushrooming of tier-2 and tier-3 management education institutes that has unfortunately not been matched by commensurate uplift in the quality of management education. Most of the students prefer to choose cheaper AICTE-approved programmes rather than B-schools,” said Assocham Secretary General D S Rawat.
In the last five years, the number of B-schools in India has tripled. In 2011-12, these schools offered a total of 3,60,000 seats in MBA courses, compared to 95,000 in 2006-07. “There are many differences between students from big colleges and from lesser-known colleges like the one I went to. We didn’t have access to good infrastructure, experienced faculty or training modules,” said Rajiv (name changed) who completed his MBA from CVK Reddy College, Bangalore. “We paid Rs 2 lakh for the course. The college would only provide us with a letter confirming that we were students there, but everything else would have to be done by us itself,” Rajiv added.
Lack of quality control and infrastructure, low-paying jobs through campus placement and poor faculty are the major reasons for India’s unfolding B-school disaster. “The need to update and re-train faculty in emerging global business perspectives is practically absent in many B-schools, often making the course content redundant,” the report adds.
Only 10 per cent of MBA graduates from Indian business schools, excluding those from the top 20 schools, get a job straight after completing their course, compared with 54 per cent in 2008. “We go into top B-schools to hire freshers. In the case of students who are from other institutions, they can apply through off-campus recruitment,” Infosys HR Director Designate Srikantan Moorthy said.
The report further adds that students who participated in the survey said that the schools promoted “their brands only on placement and by boasting about high salaries. They offer theoretical courses which lack practical skills required by the corporate sector today.” Assocham deduces that only a 10th of MBA graduates are employable. While on an average each student spent Rs 3 to Rs 5 lakh on a two-year MBA programme, their current monthly salary is a measly Rs 10,000 to Rs 15,000; a far cry from the promises of riches that most B-schools make. “As a company and online job portal, we can say that there is deterioration in the quality of B-school students. Even the quality of IIM/IIT students coming out now compared to the last 15 years has come down. This is due to the quality of school education. The faculty is also another problem as few people enter the teaching profession due to low salaries. The entire eco-system needs to be revamped,” said V Suresh, Executive V-P and National Head (Sales), Naukri.com.
Rajiv Bhatt, director at Mumbai-based HR consultancy firm Corporate Culture, believes that can’t be a singular factor that is responsible for the lean demand of non-IIM MBAs. “The courses do not essentially train the students as per the requirements of the industry. In times like these when the world is facing an economic downturn none of the companies are willing to re-train them, pay them and then wait for a while before they could be counted as productive assets,” Bhatt said.
Like Mondal, Adusumally Srujana Chowdary from Khammam district in Andhra Pradesh too aspired for a corporate placement soon after finishing MBA-Finance from Annie Besant PG College, Khammam. She spoke good English, was a sport in group discussions, fared well in academics and was an active participant in extra-curricular activities. Or so, she thought. But the trouble started in early 2011, when less than a handful of companies came for annual placements as opposed to a dozen or more in the year gone by. When Chowdary went to Hyderabad in search of greener pastures, she was compelled to face the bitter truth. Her hold on the English language and soft skills were not at par with students from premium institutes. After months of harrowing job-hunts, she started applying to smaller companies, jobs that offered a mere Rs 6,000 per month. In the last six months, she has changed three companies and is now drawing Rs 10,000 per month. “At least I have a job,” she said.
Annie Besant PG College has an annual intake of over 120 students in its MBA programme. While for a regular seat, it charges a little over Rs 35,000 per year, for management quota, the cost doubles up to Rs 60,000 per year. The college has stopped offering MBA courses since 2010-’11. “First, there were not many takers for these courses. When we started in 2005-06, the idea was to have an intake of 160-180 students in each stream (MCA, MBA). In the first few years, the response was good but it started falling gradually. Finding faculty has become a challenge,” said a senior management member from the college on the condition of anonymity.
Like Annie Besant PG College, nearly 40 MBA and MCA colleges in the state applied for closure to the AICTE in 2012 due to low enrolment rates. “No return on investments has forced many colleges to shut shop. Most colleges do not have campus recruitment and it becomes just another degree,” said R K Gangal, Director & Regional Officer, AICTE, Hyderabad.
Incidentally, about 200 MBA colleges recorded an intake of less than 20 students at the concluding counselling session for ICET-2012. “Though 80 per cent of the students from the university are employable, it is observed that candidates usually under-perform as they do not realise that they are capable of certain duties. The attitude of the candidate matters as much as their training. Most colleges lack the resources to exploit the talent of their students,” said Dr S Pardhasaradhi, Director (Placements), Department of Business Management, Osmania University, adding that the average salary drawn by an MBA graduate from the university is Rs 4.5 to Rs 5 lakh per annum.
Industry trainers observe that the mismatch between aspirations of students and their level of preparation are crucial as most of the fresh graduates are afraid of getting their hands dirty. “The industry has not accepted the students who opted for management education. The flaw lies with the negligible hands-on training provided at Tier 2 and 3 colleges. In case of Indian School of Business (ISB), candidates with a certain level of industry experience are preferred whereas in case of Indian Institutes of Management (IIMs), the students are given multiple case studies and research assignments to understand the basics of the management skills. The Tier 2 or 3 colleges lack faculty which can provide them an industry experience,” said J A Chowdary, Executive Chairman, Talentsprint, a manpower training institute in Hyderabad.
Last year in Gujarat, at least 14 management schools wound up while this year five more have approached the Gujarat Technological University (GTU) and AICTE for closure citing lack of student-strength. Mumbai-based Ajeet Khurana, who has spent over a decade training MBA aspirants, said there were deeper reasons behind the failure of B-schools. “MBA graduates are as unemployable as some engineering graduates, but you won’t hear of engineering institutes closing down. One of the main reasons that B-schools flourished in the last few years is the B-school space is largely unregulated, much like in the case of play schools. Very few B-schools are good enough to charge a hefty capitation fee or donation from the students. With the number of students willing to pay exorbitant fees to get into a school declining, the institutes have started struggling,” said Khurana.
To make matters worse, there are teacher woes that students have to face as well. “In ISB&M, our senior professors left together within the first year of me joining the school,” said Mondal. “The attrition rate among management faculty is high. Management faculty members leave the institution after three to five years of service and when a new faculty member joins the institutions there is no continuity,” said R Venkatapathy, Director of School of Management and Entrepreneur Development of Bharathiar University in Coimbatore.
Typically, fresh graduates who fail to secure a job end up as faculty in many of the private colleges. In several colleges, the head of the department will be as young as 33 to 35 years. According to industry sources, this inexperienced faculty goes by the college management’s norm to complete the syllabus on time and go by the book.
Faculty members, who are hired on a contract basis, find it simpler to change jobs in a bid to get a higher package. Salary for an entry-level faculty starts approximately at Rs 8,000 per month, while the head of the department is paid about Rs 35,000-Rs 40,000 per month. If it’s a district-level college, the pay package will vary and on an average, cost 30 per cent less than those in big cities.
Consider Mumbai Business School (MBS), founded by Dr Bala Balachandran and A Mahendran, an associate institute of Chennai’s well-known Great Lakes. MBS operated from a 24,000 square feet rented place at Malad in the western suburbs of Mumbai. For a fee of `7 lakh, MBS offered a one-year diploma course in management studies. Though it did not have the approval of the AICTE, it did not stop students from enrolling for the course. Though the number of students enrolling for the course in the three years of its existence ranged from 20-25, it was far below expectations and evidently unviable to continue with the same strength for long. Early in 2012, three years after the MBS was launched, the management decided to call it a day.
What are the solutions? Better infrastructure, trained faculty and industry linkages leading to robust placement, could help salvage the dismal picture. “I think the regulation by AICTE has been capricious and ineffective. There is a case for revamping regulation and the regulatory vehicle regarding who should be permitted to continue to offer MBA programmes. Just as entry needs to be regulated, exits need also to be forced on the grounds of poor quality of education. The latter has become corrupted,” said Prof Samir Barua, Director, IIM (Ahmedabad). The academic regulator of course denies that there is any scope for better regulation and instead urges students to be more aware of the institute that they are getting admitted to. “We have a list of approved and unapproved institutes on our website which is updated regularly. Students should go through the list and take an informed decision,” said S S Mantha, Chairman, AICTE.
On top of the world
Nothing stays at the top for long is an adage that, perhaps, is not applicable to leading international Business Schools. For, the likes of Harvard Business School, Stanford Graduate School of Business, University of Pennsylvania—Wharton, London Business School, Columbia Business School, University of Chicago—Booth and Northwestern University—Kellogg and some others have retained the top slots for decades and continue to do so.
On the contrary, in India—where thousands of B-Schools have mushroomed in the recent past, just a couple have made it to the international ranking, with the IIM-Ahmedabad and ISB figuring in Financial Times’s World’s Top 20 B-Schools in 2012. According to Savita Mahajan, Deputy Dean and Chief Executive, ISB Mohali campus, aspects like real-time learning, radical approach to teaching, tailor-made curriculum suiting industry requirements are crucial to groom students as per global standards.
World over, every B-school has a unique teaching methodology. If some institutes, like the Carnegie Mellon’s Tepper School of Business, sticks to the traditional lecture-based classroom teaching, others like the Harvard School of Business popularised case study-based teaching, where more than 80 per cent of the two-year subjects are taught using cases. But all the leading B-Schools have few things in common. Guest lectures by renowned academicians and successful businessmen from all sectors, be it manufacturing, textiles to online technologies. As a result of this, students get a good exposure, listening from people who have been there and done that.
“Students hired from international schools are readily employable. They clearly know the industry requirements, and we incur little time and resources to train them. There are equally sharp and bright students in Indian institutes too. But this lot is limited to just a few, as there are few premium institutes in India,” reasons Lakshmanan Chidambaram, Head, North America, Mahindra Satyam, which now plans to hire more local business development executives in the USA.
Another important facet of international institutes is mentorship. Every student is assigned a dedicated mentor throughout the course tenure, who will constantly monitor the students’ progress, assign small jobs, sometimes live projects based on students’ capabilities. “This is something that’s found in a few institutes in India. And unless, students are put on the job, while studying, they’ll find it hard to survive later,” says J A Chowdary, Executive Chairman, Talentsprint.
Lastly, unlike Indian colleges where quantity matters, student intake in international B-Schools is limited to give individual attention and ensure that at the end of the course tenure, each one of the students has multiple job offers in hand to choose from. “If the quality of students is good, companies will prefer to visit them time and again and some even offer hefty pay packages. All this in turn makes that B-School more popular,” says Chidambaram.
‘we started many firsts in India’
The business schools in India need to review their curriculum regularly, have world-class faculty and facilities to attract excellent students and match the global standards, says Ajit Rangnekar, Dean, Indian School of Business, in an exclusive interview.
How does ISB ensure that all students have employability skills?
Our students are already working in junior and middle management roles with prior work-experience, ranging from two to 20 years, when they come to the ISB. We groom them for senior management roles through various initiatives, during their one year at the school through classroom learning, industry exposure and projects that allow students to work on real-world business issues.
How often do you modify curriculum so that it matches industry requirements?
It is important for the B-Schools to have in place a process of review, and update their curriculum corresponding to the business needs and global environment. The ISB has a very robust curriculum review system in place. We have a comprehensive review once in five years and yearly updates in the curriculum, introduction of new electives, seminars and workshops regularly.
What does it take for a B-School to achieve success?
We identified five key areas in the beginning, partly based on Prof. Peter Lorange’s excellent work at the IMD, an outstanding student body, a world-class curriculum, global faculty, a strong infrastructure, and a very committed staff to look after the ‘business’ part of the school. Wharton and Kellogg helped us develop a world -class curriculum. Their association, their brand equity and their committed professors not only took the teaching as their own responsibility, but also helped us develop a model to attract global faculty to teach at the ISB. The innovative “portfolio faculty” model allowed the ISB to recruit bright young faculty from the best schools in the world, while allowing us to invite leading faculty from the best schools as Visiting Faculty to ensure a global experience.
What challenges did ISB have to face on the way?
Over the years, the school has been successful in achieving milestones on several areas. But, like any other new B-School, the ISB also witnessed the ups and downs in the first few years of its inception. Being located in an emerging economy was challenging in terms of working out on finances, working with the regulatory authorities, and tackling competition among several others. We started with many firsts in India... one-year programme, international associations, portfolio model of faculty, taking students with prior work experience, lateral placements, working as an independent institution, strong focus on research, especially on emerging markets. But we continued to focus on our vision and mission, to make the school a top ranked independent institution.
Why do you think are our B-Schools not up to the mark? How are you different from international institutes?
One very clear reason why global B-Schools have an edge over the Indian B-Schools is that there is a very strong eco system of high quality institutions, well supported by industry, academia and donors and their alumni. B-Schools need to focus on research, high quality faculty and cutting-edge curriculum to be able to make a mark for themselves among the top global B-Schools.
With Sunitha Natti, Sharan Poovanna, Ganesh N, Sruthisagar Yamunan, Arun Jayan, Mannar Mannan