School Business

There is no official estimate of B-schools in India but according to a private database, there are over 900 large and medium institutes offering an MBA or a PG diploma in management. Maharashtra tops with over 140, followed by Andhra with 114 and Tamil Nadu with 109. Even UP has 90. Many of the smaller schools won’t even have proper buildings or faculty, forget placement facilities. Worse, few students bother to check fully before registering.

Admits R.A. Yadav, director, Lal Bahadur Shastri Institute of Management, Delhi: "There is nothing wrong in having many schools as demand is far above availability. But many come in not for education but for the money." So, many students of smaller institutes haven’t found jobs. "In the end," says Yadav, "it isn’t just the degree corporates look at but also where one has received it."

There’s big money in the management education business. Fees range from Rs 2 lakh to Rs 5 lakh in more high-profile schools. Where does this money go? Even though these schools are supposed to be non-profit organisations, in most of them, the surplus generated is hardly ever invested in faculty development or infrastructure.

Is there no way to check this menace? The All-India Council for Technical Education (AICTE) is supposed to set standards for and monitor technical education institutions in the country. Yet only a little over 600 business schools are approved by the AICTE, while a far fewer number is actually accredited. Says a member of the National Board of Accreditation, which oversees the accreditation process: "Since 1994, about 20 institutions and 35 programmes have been accredited by us." But many do not agree with the system of accreditation. Says Ashok K. Chauhan, chairman of the Noida-based Amity Business School (which is approved but not yet accredited), "Corruption is rampant. The schools do a window-dressing for the inspection team to get accreditation. After that, it is business as usual."

One way to do this, say management experts, is by separating the ownership from the running of private business schools. Says Yadav: "In many schools, owners are directors, even faculty. What kind of values can you have in such schools? Will they concentrate on education or making profit?"

But not all private B-school degrees are useless. Says a headhunter in Delhi: "Large business houses have started looking beyond IIMs for two reasons. First, non-IIM MBAs cost far less and second, a lot of large private business schools have actually achieved the level of maturity desired by and acceptable to corporates." Adds Yadav, "The trends in management education are changing fast. Often, the smaller schools are first to adopt the change, while the big and elite are often rigid about their approach. The IIMs are mostly evaluated in terms of the salary the students get. Does anyone talk about what they teach there that we don’t?"

The quality of students is important too. Admissions are not always based on merit. "That’s one of the reasons why most private B-schools fail to produce quality graduates despite good infrastructure and faculty. The principle of garbage in, garbage out applies to B-schools too," says A.K. Sengupta, director, SIES College of Management, Mumbai.

But private schools will continue to gain in importance because every year, only about 1,500 students get into the IIMs. Some of the rest go to the second-tier schools but the majority are forced to fall back on the lower tiers of private schools. Many of whom have got their own cynical business models working perfectly.