When an MBA aspirant fails to make it to the top 30 Indian business schools, his/her choices hover around the next set of B-schools.
It may be poor scores in the qualifying examinations or lack of job experience, or a combination of both which prevented the aspirant from getting into the top business schools.
But these aspirants are keen on pursuing an MBA and have to choose from the next best ones. The problem is how to make an appropriate choice? With the number of B-schools in India mushrooming, the job of choosing one among them has become difficult.
A rough estimate of B-schools in India as seen in some of the popular websites quotes the figure as being close to 2,500. Out of this, nearly 75 per cent are approved by accreditation institutions such as AICTE. Their cumulative capacity for student intake is close to two lakhs from a total pool of 3.5 lakh applications through different entrance examinations.
The numbers should have then supported the fact that it is not a problem for B-schools to fill in their required capacities. However, this has not been happening for the last few years. An increasing number of B-schools are finding it hard to fill even 50 per cent of their available capacities. Why is this trend persisting and what is the future of these schools?
One possible reason for this trend is that the market for MBA education has moved from being an oligopoly to a monopoly. The growing demand for MBA graduates has definitely attracted many institutions and private players to venture into this sector and to increase their operations in terms of scale and scope. The top education brands (tier one category) in India such as the IIMs, IITs, and ISB Hyderabad are no exception. The number of centres of IIMs has increased over the last few years. IITs too have expanded their scope to management areas. ISB, Hyderabad will soon be launching its operations in North India. The top students in the country thus have more centres from the top brands in tier one. This leads to a cascading effect down the hierarchy to tiers two, three, and so on. If the bottom 20 per cent of the B-schools is struggling to fill their seats,the mid category of the schools find it difficult to fill their seats with quality candidates.
Another possible reason for such a trend is the demand-supply effect operating in the industry. The number of applicants with work experience has increased over the years. In the year 2009-10, 60 per cent of the applicants who wrote CAT had work experience. In the years earlier, fresh graduates had chosen to do an MBA as there were not many job opportunities available for freshers in the industry.
An MBA under such a situation was a handy and obvious choice. But with the number of finishing courses after graduation in the sales, banking, accounting fields increasing and with the expansion of the business processing industry, getting jobs with a graduation degree is no longer impossible. Furthermore, applicants with work experience have a clear calculation on their return on investments and their opportunity cost. They would prefer to get into an MBA programme only if they make it to the top tier B-schools.
The problem lies with freshers who do not make it to the top tier B-schools and are left to choose from the remaining clutter of B-schools. Many have realised that rankings are a poor reflection of the quality of the business schools. Ranking methodologies significantly differ across ranking agencies resulting in confusing the students rather than guiding them. Many good B-schools, therefore prefer to stay away from participating in those rankings. How would this provide any indication then?
A survey conducted by a B-school, IBS Bangalore, recently reveals some interesting facts. The choice of B-schools by the aspirants significantly differ across regions (other than for the IIMs) indicating the growing monopolistic nature of the market.
It is also seen that aspirants are unable to indicate the reasons for their choice of B-schools, especially in the mid-category, reflecting poor differentiation existing among these schools.
The strong factor influencing the choice would then be the geographical proximity to the student’s home town which would add to convenience and reduce the cost of living. Many students, especially in semi-urban and small towns hardly follow the rankings and the methodology behind the rankings. Given this scenario, the primary yard stick before them is the kind of placements these schools offer, the fee they charge and the brand image the schools carry. The survival of the fittest would therefore depend on how the schools produce what the market requires, the ones that can assure the applicants the best return on investment.
Differentiating is key
There are, however, possibilities especially for the second tier B-schools to differentiate themselves in this monopolistically competitive market. Similarly, the customers of these B-schools can look at alternatives to make their choices meaningful. The second tier B-schools suffer from good quality, especially, academically qualified faculty members.
There is a dearth of PhD qualified faculty in most of these schools. Even if some schools do have PhD qualified faculty their continuous engagement in research is significantly low compared to their top ranked counterparts as well as those compared to universities elsewhere in the world. The participation of faculty in consulting is also substantially low.
These points however cannot be emphasised unless the B-schools make lucrative offers to faculty members and more importantly give them substantial time and scope to engage in research and consulting, taking time off from overloaded teaching assignments.
A faculty member in a typical B-school in the second tier spends about 10-14 hours a week in teaching which leaves little time and enthusiasm for research or consulting. Secondly, most of these B-schools have ad hoc design of their choice of faculty that are not envisioned towards developing core departments or areas within the B-school framework. This provides an opportunity for some first mover schools to differentiate themselves.
From the customers perspective return on investment certainly is a criterion to choose a school. However, it is difficult to make a choice purely based on the placement situation of the B-schools or average salary package. Since investment in education (especially higher education) is a long-term investment, the above two indicators if not wrong are poor representatives of growth.
If learning in the B-school is inadequate there is a possibility of stagnation in the income growth of the individuals. On the other hand quality of jobs that rarely can be verified by the customers includes what kind of jobs are offered to the students of the B-school. Depending on the positioning of the B-school, typical job offers include sales of product and services, supervisor roles, manager roles and strategic roles.
Of these the last role is usually cornered by the top tier B-schools because of their positioning and attracting talents with substantial work experience. The competition remains in the other categories of jobs among the rest of the B-school pass outs. The other important aspect to look at the position of the B-school is to find out the learning experience that can be delivered by the school.
Though there are no easy ways to find these out, some indicators of these would be the number of faculty having PhDs and engaged in research and consulting. The other relatively easier indicator would be to identify the structure of the B-school that has departments or areas specified with an adequate number of qualified research/industry consulting engaged faculty in each of these departments or areas.
The presence of centres for excellence in some specialised areas of research is a step further to differentiate. There are qualitative differences in these aspects too. However, if the choice is between some B-schools having a presence of these indicators a prudent choice would be to look at a B-school having those for long-term return on investment.
M. G. Deepika and Dr. Amalendu Jyotishi, “Choosing the best b-school among equals”, Deccan Herald, 2011.