There is a 93% chance you won't get a job after an MBA.
The recent studies conducted by ASSOCHAM India reveal some concerning data over the management education sector in India. According to the report, barring IIM graduates and other Tier I colleges, only 7% of management graduates from a total of 5,500 B-Schools across India are employable. Noting the small number of employable graduates, 93% of the bunch according to the study is either unemployed or earns less than 10,000 Rs. per month.
The ASSOCHAM Education Committee (AEC) while expressing a concern over the huge number of graduates who are not at par with the standards of the business world, also noted that a majority of them come from Tier II and Tier III B-Schools. India has around 5,500 management schools excluding the unapproved B-Schools which makes the list even bigger. A deeper dive into the condition revealed that out of all the B-Schools, 220 colleges shut down in two years in some of the major cities including New Delhi-NCR, Mumbai, Lucknow, Bangalore, Kolkata, Ahmedabad, Dehradun and Hyderabad. 120 more colleges are predicted to shut down in 2016 and additionally, the economic slowdown in 2014-2016 has led to a 45% decrease in campus placements of the colleges.
“There are more seats than the takers in the B-schools. This is not surprising in the wake of poor placement records of the pass-outs, “ASSOCHAM Secretary General D S Rawat said.
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Adding to this statement, Nirmalya Kumar, who is a Member of Group Executive Council, Tata Sons, says, “The IIMs should increase their annual intake capacity by tenfold immediately. A management school is known by the number of successes it has [students who go on to do well professionally]. No one can predict which student will be successful in the future. So, to increase the chances of such a success, you need to increase the batch size.”
Agreeing with Nirmalya is Dr Bakul Dholakia, Director General, International Management Institute, New Delhi, who adds, "A large number of CAT aspirants, who qualify with a top quality 80 percentile score or above, seek admission in one of the top 100 colleges which only have a few seats on offer," says Dholakia. "This pool of candidates consists of a substantial number (40,000 or more) of applicants every year who have nowhere to go after not being able to secure admission in any of these top ranking institutions."
Dr. Dholakia also noticed that this crème layer of students do not prefer admissions into Tier II and Tier III B-schools owing to the lack of infrastructure and poor placement records. Instead they prefer to pursue a job or go for higher studies outside of India.
“In a sense, management education has failed in the country. Otherwise, so many people wouldn’t be leaving the country to study abroad. We don’t see too many Americans, Germans or Japanese students leaving their home countries to pursue higher studies” says Nirmalya.
Moreover, the report throws light on various facts which are important to the implications of this study. In the last five years, the number of B-school seats has tripled. While the total number of seats in 2012 was 3,60,000, the number tripled drastically in just 3 years with 5,20,000 seats in 2015. And with an expenditure of Rs. 3 to Rs. 5 lakh on an MBA, an average graduate earns merely 8,000-10,000 Rs per month. Even the quality of IIM/IIT students coming out now compared to the last 15 years has come down due to the quality of school education, cites the study.
The last point which brings IIMs, the highest level of management colleges, into question compels one to rethink the expertise of the faculty and the quality of graduates. Nirmalya further enlightens one with some more surprising information. “None of the Indian universities features among the top 200 in the World University Rankings (brought out by Times Higher Education). If you look at research, the entire universe of Indian faculty across management schools has together published less papers in leading international journals than I have over the course of my career. And I wasn’t even the most productive in the world. So business schools in India, especially the IIMs (Indian Institutes of Management), are stuck in the pre-1991 mentality, which is very much about controlling the supply of students that enter these schools and graduate each year, since there is no dearth of demand”, he says.
Pointing towards another prevalent system he says “In India, you can finish your undergraduate studies and proceed directly to do a master’s programme. Abroad, you need an average of four years of work experience between the two courses. Those four years of professional experience teach you a lot and candidates with such work experience are more employable than the others once they complete their MBA.” However he also mentioned Indian Business School, SP Jain and some private colleges which are working more on their quality and trying to mark themselves according to global standards to achieve recognition and provide world class academics.
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Nirmalya and Dr. Dholakia both agreed on the matter of faculty development, saying one of the reasons for low level management graduates is also the lack of investment on the faculty. While Dr. Dholakia points out that the more qualified and expert faculty teachers are found working abroad because of better pay, Nirmalya says, “I would urge the IIMs to also diversify their hiring strategy and hire teachers from a talent pool that has trained at top global institutions, and not only doctorates from other IIMs.”
Dr. Dholakia mentions some changes that can be easily made to make sure the quality of management colleges is uplifted. He says, “ The colleges should invest more on quality education which comes by developing and hiring the right experts and faculty, upgrading the syllabus with the current business industry and incorporate infrastructure that meets global standards.”
For Tier II and Tier II B-Schools, Dr. Dholakia adds, “The focus of Tier-II and Tier-III colleges should be to nurture managerial and entrepreneurial talent for the regional and local markets. These prospects can contribute to the development of the SME sector as it is one of the pressing concerns of the Indian economy presently.”
Along with management education, the ASSOCHAM study also mentions the declining rate of employable engineering graduates. India has around 15 lakh students graduating each year of whom only 20-30% get a good job. Rest are either unemployed or work in profiles below their qualification standards.
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There is obviously a trend of Engineering, which is engineered largely by the elders and the community. The number of engineers is increasing more than the rate of economic growth. Only the IT sector is able enough to absorb engineers in large numbers, between 50-75 %. There is also an increased difference between the expectations of graduates and their job readiness. Of the 97 per cent engineers who look for jobs in IT and core engineering, only 18.43% are employable in IT & 7.49% in core engineering, noted the paper.
This study was first published by ASSOCHAM Education Committee, India on April 27, 2016
About the experts:
Nirmalya Kumar, aged 56 is a Member, Group Executive Council, Tata Sons and has done B.Com from Calcutta University and followed it with an MBA from University of Illinois at Chicago. Later for higher studies, he pursued a Ph.D. in marketing from Kellogg School of Management, Northwestern University.He was a professor of marketing at the Aditya Birla India Centre at the London Business School and has previously taught at IMD, Switzerland and Northwestern University (Kellogg School of Management). He has been serving on the boards of ACC, Bata India and UltraTech Cement, among others and also has worked with several top global companies in over 60 countries. He is also an author with 6 books to his credit and is considered one of the highest management thinkers.
Dr Bakul Dholakia is the Director General, International Management Institute, New Delhi, which was ranked the first among private B-schools in the country and the seventh overall among management institutes in India by the NIRF Indian Ranking 2016.