India’s MBA Story: the Evolution of Business Schools

While there is a high premium attached to the MBA in India, the profile of the business school awarding the degree is what adds value to the qualification, according to industry and recruitment firms.

The MBA is considered a golden ticket to the world of professional success in India. A degree from a leading business school such as the Indian Institutes of Management (IIM) or the Indian School of Business (ISB) ensures a plum job, a fat pay packet and a successful professional life.

At the recent student placements conducted by the Indian School of Business, 346 domestic and international companies lined up with a variety of roles, including several senior management positions for students.

Indian MBA salaries

Salaries offered to the Class of 2010 increased by 11% over last year, while companies recruiting MBA graduates included the Boston Consulting Group, Google, IBM, McKinsey and Company, Accenture, Royal Bank of Scotland, and A T Kearney Ltd among others.

Other leading management schools in India such as the Management Development Institute (MDI), Gurgaon and the Jamnalal Bajaj Institute of Management Studies, Mumbai have reported similar success at placements.

According to a study by Indian business magazine BusinessWorld, there has been an increase in the number of job offers and salary packages offered to students of top business schools in India. The study concludes that post-recession, demand for MBAs is looking up.

“In India, the MBA is viewed as a passport to success in the corporate world,” says Purnendu Kumar, associate vice president of Technopak Advisors, a management consulting firm in India. Every year, hundreds of thousands aspire to getting admission into a leading business school in the country. Given the stringent admission procedures followed at the IIMs and ISB and the shortage of seats, less than half actually make the grade.

Ajit Rangnekar, dean at the Indian School of Business (ISB), Hyderabad, comments: “India has a large pool of bright young students whose aspirations have been limited by the lack of right opportunities.”

Business school recruitment

On the other hand, India’s developing market and post-recession buoyancy has fuelled a rising demand for professional managerial talent. Companies are thronging to business school campuses in search of skilled candidates to take on managerial roles within the organization.

“Large companies generally zero in on leading business schools such as the IIMs and ISB when they are conducting recruitment interviews,” says Kris Lakshmikanth. Lakshmikanth is the founder CEO and chairman of Bangalore-based recruitment firm, Headhunters India. “It is a well-known fact that there is a large pool of talent at these institutes and corporations do not want to compromise on quality when it comes to hiring people.”

Ariff Kachra, strategy professor and director of India development at the Richard Ivey School of Business, The University of Western Ontario adds: “In the Indian job market, employers have to hire based on aspiration. This is very different from recruitment trends in North America.”

Kachra explains that in North America, companies often hire executives who have already done the job at another organization. “That’s okay in a region that is growing slowly, but in a region like India which is seeing rapid growth, executives are hired who have the ability to grow into that position.” From a recruitment point of view, having an MBA degree from a good business school certainly enhances a candidate’s ability to ‘grow.’

Un-accredited business schools

It is here that a slew of private players have sensed a business opportunity. With the demand for quality management education outstripping supply and a shortage of seats at leading institutes such as the IIMs and ISB, there has been an astonishing growth in the number of private business schools being set up in the country. The current count has 2000 business schools operating in India but according to the All India Council for Technical Education (AICTE), an advisory and statutory body for the regulation of technical education, only 1600 are accredited.

“Many of these private institutes, unfortunately, are not concerned about quality,” notes Professor Sougata Ray, dean of program initiatives at the Indian Institute of Management, Calcutta. “Without proper regulation, the institutes flourish at the expense of students.”

Kumar agrees: “The private colleges offering MBA programs have limited focus on course delivery, industry interaction and proper infrastructure. As a result, students from these institutes do not have the necessary skills required for a managerial position, and often end up with lower level positions in sales or retail.”

Lakshmikanth explains that the rigorous admissions process at top business schools in India are a huge attraction for MBA employers. “The admission criteria at institutes such as the IIMs acts like a filtration process. The competitive entrance examination and group discussions ensure that students with the right mix of academic credentials and job experience are chosen. The education they receive at the institute grooms them for management positions in industry.”

With the government opening up the higher education space to foreign universities through the Foreign Universities Bill, the problem of shortage of seats at Indian business schools will be somewhat diminished. With a number of foreign business schools offering their programs in India, students will have more MBA options to choose from. An MBA degree from an international business school would help students gain first-hand experience of global management methods and multinationals value this exposure from a recruitment perspective.

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