A small town man with big dreams, 26-year-old Srinivas was drawn towards doing an MBA in the hope of securing a successful future. He had performed reasonably well in his academics while pursuing BCom from Aurora Degree College in Hyderabad, but the native of Guntur, Andhra Pradesh struggled to find a job. After working in a call centre for a couple of years, Srinivas found it hard to survive with the meagre salary he was earning. When his father who worked as a clerk in Guntur retired, Srinivas realised that he now had to provide for his family as well, at a time when he was just barely scraping through himself. That’s when he decided to do something about it.
“A friend suggested that if I do my Master’s in Business Administration, I would be guaranteed a good job in a leading company and would earn a healthy salary, which would be enough not just to support my family, but to live comfortably,” says Srinivas.
His heart filled with desire and determination, the ambitious young man diligently worked to score a good score in CAT (Common Admission Test) and managed to get admission in an MBA college in Hyderabad. His joy was short-lived when he realised that the fees charged by the MBA institute was steep. “It was unthinkable for me to pay so much money to study. But I decided to take a student loan, as I could always pay it back once I got a job,” he explains, innocently.
Three years later, Srinivas had an MBA degree in hand, but not a job. After months of struggle, Srinivas did get one, but is drawing a meagre salary of Rs 22,000, more than half of which goes towards the payment of his education loan. A dejected Srinivas has now begun to wonder if that expensive MBA degree was worth it after all.
An MBA indicates that one has mastered a certain level of knowledge in business management, which gives them the ability to deal with the pressures of the industry and interact with top professionals and executives on business-related issues. In recent years, there has been a sudden spurt in the number of institutes offering MBA programmes. Apart from the competition intensifying among MBA grads, this has also resulted in business schools cashing in on the ‘MBA wave’ in the country, with many offering ‘100 per cent placement’. The reality, however, is that many of these institutes have poor infrastructure, and faculty who lack practical knowledge.
“Today we have around 4,000 postgraduate institutions imparting MBA equivalent education, of which 80 per cent are not delivering the quality of management education
that would enhance the employability of the students,” says Bakul Dholakia, Director General of International Management Institute, New Delhi.
Dholakia, a reputed management thinker who was honoured with the Padma Shri, feels there is a huge gulf between the top business schools and the average institutes in India. “The bottom 2,000 of the business schools are not able to place even 15 to 20 per cent of their students. It is a pathetic situation. On the other hand, if you look at the top 50 schools, their record in terms of placement is extraordinary. Easily 90 per cent of the students in the top 50 business schools get placed within one month of finishing their course,” he explains.
Many educationists feel that the mushrooming of MBA schools is leading to decline in the quality of faculty, which in turn affects the industry-readiness of the graduates. “It is not a question of physical infrastructure, it’s a question of quality of faculty, a question of curriculum. It is a question of how that curriculum is delivered,” observes Dholakia, who has previously worked with IIM-Ahmedabad for 33 years.
A slowing economy has compounded the problems of MBA graduates, he feels. “It is not that there is no requirement of managerial personnel in the Indian economy. But not for all the over two lakh managers who graduate from the thousands of institutions every year. Especially because for the last three years, the Indian manufacturing and industrial sectors have not been doing very well. The economy is not doing well and there is no new investment. Therefore, job creation in the organised sector has not been increasing at all,” he points out.
There are jobs available still, in the MSME (micro, small and medium enterprises) sector, but with their dreams set at CTC packages running into lakhs of rupees, most MBA graduates are indifferent to these jobs that pay Rs 15,000-20,000. “It is not that there is a dearth of jobs, there is a dearth of those jobs that they want,” adds Dholakia, a consultant for World Bank and Asian Development Bank among others, blaming it on the indifference shown by business schools across the country to smaller enterprises.
“Now the requirement is in the MSME (micro, small and medium enterprises) sector. But they cannot afford the kind of salaries that business school graduates would expect. Students are also not interested in working there, because the business schools are not training them for smaller enterprises. Everybody is training people for the big corporates, but these big corporates will go for recruitment only to institutions that have an image and a brand," observes Dholakia, who also served as the chairman of the National Board of Accreditation for Technical Education in India (2005-2008).
“Just as there are students with different potentials and capabilities, there are different employers with different requirements. I don’t think they have even looked at the management curriculum in terms of international needs, national needs, regional needs and local needs,” he rues, advocating a process to categorise the institutions. The top category institutions will prepare managers for the high-end of the corporate sector and the international market, while the next category can prepare graduates for jobs in the regional level. And the following category should prepare managers for the local market, he explains.
Industrialists from the MSME sector concur, noting that there are plenty of jobs on offer but graduates have sky-high salary expectations, despite their lack of experience. These high expectations are not just unrealistic, but unreasonable as well, notes Suresh Chitturi, Vice-Chairman and Managing Director, Srinivasa Hatcheries, Hyderabad. “There is a huge gap between what they learn in business schools and what the industry needs. Quite a few of them are out of sync with reality, get fascinated by an MBA degree and think that they’re something special, which they’re not,” he opines bluntly.
Chitturi blames the institutions in equal measure for graduates not being ready for the demands of the industry. “The MBA schools are trying to teach students like it is an engineering course, in a very regimented manner. They treat the text book like a Bible! Their industry interaction is very bad and most of them graduate solely with textbook knowledge rather than case studies and discussions. Because of this, they are not prepared at all for the demands of the industry. We do not hire such students, definitely not for important posts,” he says.
According to him, young management graduates should realise that the MSME is the most vibrant sector across the world that has a much bigger share of employment than the corporate companies. Performing well there would fetch them an opportunity to work in the big corporates. “ Not everybody can go to an IIM or ISB, so the route is to learn in smaller companies and then work your way up,” he observes.
Dholakia points out another example of mismatch between reality and an MBA graduate’s expectations. Among those with work experience coming to business schools, a substantial number are IT professionals. “They feel because of the work experience, they deserve a higher salary than those who do not. But recruiters from manufacturing, industrial, services and other sectors do not find this experience relevant,” he explains.
Many academicians, however, believe that the value of an MBA remains intact. According to RK Mishra, Director, Institute of Public Enterprise, a management institute in Osmania University, Hyderabad, it largely depends on the individual, rather than the course and the institute. So long as they keep the drive, they can succeed. “Any degree on its own does not make any sense; it also depends on what kind of people come for an MBA. You should have some fire and you should be able to respond to the needs and deliver. Whether they have aspirations, whether they can do hard work, whether they are self-motivated people who can take initiative, who can differentiate between good and bad and have an ambition to grow — all these factors play a role in a person succeeding in life after an MBA,” observes Mishra.
Conceding that there are several issues in institutions as well, especially with respect to faculty, he says, “If you look at faculty at all the business schools in India, how many of them are paid well? Do they represent different sectors of the society? What is their experience? Are they adding value to their knowledge? That is a huge issue management institutes are currently facing but nobody asks these questions.”
Agreeing that there are different types of MBA schools, some of them offering greater reward, Mishra reiterates that an MBA from any institution will hold value as long as the students have the desire.
“While the degree by itself is very valuable, the question is, are you putting value into it? Because if you don’t, then it’s pointless,” he adds.
A joint survey recently done by Development Dimensions International (DDI), a global talent management firm, along with The Conference Board, a non-profit business membership and research group, to check the preparedness of companies in India to meet the business challenges associated with global expansion, does not present a good picture.
The report includes responses from 836 leaders, 244 human resource executives in India. A shocking 39 per cent of HR professionals reported that leaders in their organisation are slightly or not at all prepared to handle human capital related challenges which include retaining and developing talent, managing complexity, leading change, leading with integrity and having an entrepreneurial mindset. Only 31 per cent of Indian organisations are prepared to meet the business challenges which include customer relationships, innovation, operational excellence, corporate brand and reputation, global expansion, among others, as the country witnesses not much of an improvement in the quality of leadership.
“Often, people coming from business schools think they have superior degrees, but many are not aware of the leadership skills that are required for the job. They are not able to effectively interact with others in the corporate environment, they don't know what kind of leadership skills are required when they get on to the job,” explains Amogh Deshmukh, head, sales and marketing, DDI.
To address this issue, firms like DDI prepare graduates to be corporate-ready, and help them deal with the high pressure of a job in the corporate sector. “There is an increasing demand to build campus-to-corporate relationships, with more and more organisations specifically investing in such programmes. Depending on their needs, each organisation decides what kind of leaders at a particular level they would require. Work is done accordingly to groom the graduates,” explains Amogh.
Giving further insight into the kind of work that they do at DDI, Amogh says, “First, we look at the learning orientation — is this person ready to learn. Then whether the person is really inquisitive about different things that an organisation has to offer. We train them on the basic leadership skills that are required at the entry level. Whether interacting with team members or preparing for corporate meetings, there are a few things that management trainees who will soon become young leaders, need to focus on.”
Meanwhile, there is hope in the air for the hundreds of MBA-holding Srinivases now struggling to make ends meet. Dholakia, for one, is optimistic about the future and is confident of more job creation once the economy picks up.
“I see a much brighter placement season in 2016, compared to 2015. The recovery of the industrial and manufacturing sectors would happen in the third quarter of this year, which is the most crucial point for recruitment. Though actual investments are yet to pick up, there is euphoria, there is hope, and there are expectations at the moment,” he adds.