After the swift growth in the 1990s, many Indian business schools suddenly appear to be stagnating, and some seem to be even in a state of steep decline. There are reports of many schools not being able to get enough students. Many government-aided business schools, which do not have the autonomy necessary to respond dynamically to the changing environment, are moving downhill. So are some private business schools which do not have enough resources, or which tolerate and promote incompetence. This year, after the questionnaires were sent off to all the business schools for our annual survey, directors of over a dozen schools called back to say they would not be participating because they had not performed well, and were sure would get a low rank.
Suddenly, business schools have to compete far more aggressively for both students and recruiters. And among the developing trends in management education we spotted during our study, the clearest one was: to win they will have to have best-in-breed governance systems and a visionary leadership.
Managing Management Schools
What could be the best governance model for Indian business schools? Speaking with dozens of professors and managers, a few factors emerged. A transparent process of student acquisition, systematic academic management and continuous industry interface seem to be key contributors to long-term sustainable competitive advantage for any business school. Our surveys over the past few years also indicate that of all success variables, industry interface and intellectual capital are the key differences between a top school and an also-ran.
The variation in these areas between the elite schools and the rest—industry interface and intellectual capital—is amazingly high. And as far as industry interface goes, even our top schools are nowhere near the levels seen in the West. Says Dr A.K. Sengupta, director, sies College of Management Studies, Navi Mumbai: "Unlike in the West, our business schools, including the IIMs, have failed to achieve any pathbreaking research that can revolutionise either theory or practice. The reason is absence of a symbiotic relation with industry."
Business schools interface with industry at different levels in India: guest lectures by corporate executives-actual practitioners of the art and science of management, seminars, workshops, students working on live projects for companies in the real marketplace, management development programmes (MDP) conducted by the business schools for working managers, and industry-sponsored research and consultancy. Though many Indian business schools are now doing well in organising lectures and seminars nearly every week, research in collaboration with industry is still a neglected area. "Of all the interface levels, research and consultancy should be the highest. It has been low but things are changing now. With competition growing, industry has realised the importance of research," says Dr S. Neelamegham, director, NIILM Centre for Management Studies, Delhi.
B-SCHOOL BRIGRADE: Students at the S.J. Mehta SoM, IIT Bombay
Our survey shows nine business schools in the private sector have a revenue of over Rs 1 crore from consultancy and MDPs. Most of them have a dedicated team to market their intellectual capital.
Infrastructure Focus
In the area of infrastructure, the gap is showing between the winners and losers, especially in the university business schools. Amphitheatre classrooms, wireless campuses, a laptop computer for every student, electronic databases in libraries are the new additions in some of the country’s best schools. The Indian School of Business (ISB) in Hyderabad has set some new infrastructural benchmarks (see story on page 56).
Take a glance at the computer/student ratios of the top institutes. The IIMs at Ahmedabad and Lucknow have more than two computers per student. Among the private schools, Amity Business School, Delhi, S.P. Jain Institute of Management and Research, Mumbai and imt Ghaziabad have nearly two computers per student. Most of the better institutes are today fully wired, and students can access their libraries’ electronic databases without having to step out of their hostel rooms.
Geography Is History
Distance education is another area where a number of business schools see great potential. The availability of satellite technology is the key reason this area has got a fillip. Four business schools, including xlri and Indian Institute of Management, Kozhikode have partnered with Hughes Network Systems-owned Direcway Global Education for real-time interactive education for working managers.
The system works something like this. The management professor may be seated in a studio in Gurgaon, Bangalore, Kozhikode or Jamshedpur. He makes his presentation to the TV camera placed in front of him. Students seated in special classrooms all over India can interact with him via satellite. Says Amit Tripathi, vice-president, Direcway: "It’s better than distance education and e-learning although it cannot replace the intimate classroom ambience. This is best for working managers as they can continue their education even if they are transferred to different cities. Also one gets to learn from the top faculty." In 15 months, Direcway has developed 35 classrooms in 23 cities. About 1,500 students have used this method of education and attrition rate is only 2 per cent.
Employment Outlook
On the jobs front, post 9/11, foreign employment has taken a beating. Last year, 23 per cent of IIM Ahmedabad graduates got foreign jobs and the top annual salary was $1,55,000. This year, the percentage has fallen to 20—the maximum salary offered plummeted to $90,000. In IIM Calcutta, the percentage of students placed abroad has dropped from seven to four, and the maximum salary declined from a whopping $2,00,000 to a reality-check $90,000. Overall, the percentage placed abroad has come down by over 30 per cent, and the average dollar salary by over 25 per cent.
BRIGHT TIMES: The VG School of Management, Kharagpur has jumped up two ranks this year
Private Universities
An interesting development is the birth of private universities in young states like Chhattisgarh and Uttaranchal through acts of state legislatures. As many as 24 business schools have acquired or are in the process of acquiring private university status. "This is a right move," says Dr Rajan Saxena who quit the directorship of IIM Indore as he was frustrated with bureaucratic bottlenecks. "This way good business schools will have more flexibility to grow. Too much job security to faculty has vitiated the government-run institutes."
Some schools like the Principal L.N. Welingkar Institute of Management Development and Research and ICFAI B-school are opting for international accreditation. This would be important for their international recognition in 2005 when gats (General Agreement on Trade in Services) comes into force. As many as 11 business schools have acquired international linkages this year. Some are even contemplating opening branches abroad! But 77 per cent of the business schools surveyed have no exchange programmes at all.In all, the news from the management education front is mixed. The positives: domestic employment scenario has improved, progressive institutes are using technology to make the learning processes easier and faster, interaction with the corporate world is growing. Negatives: many business schools are finding it difficult to attract both students and recruiters, the aspiration value of management education may be reducing.
But the negatives too may have a silver lining. There have been too many business schools set up by too many people with only the profit motive in mind. Too many students have paid too much money and got meagre returns on investment. Now, increased competition means business schools have to excel or perish. And it’s time students realised that just any old mba degree does not guarantee those jetsetting jobs.
