The state of our economy is best mirrored in the placement performance of business schools this year. Sample the statistics: 68 per cent of the schools surveyed couldn’t place even 50 per cent of their graduates. If we leave out the top 10 schools, the average salary for Indian jobs this year was a mere Rs 10,000 a month! This, after the student spent at least Rs 2 lakh as academic fees. You don’t need to be a finance whiz to figure out that that’s a pretty poor return on investment.
And while the Indian Institutes of Management (IIMs) and other top business schools completed their placement seasons in the customary one or two days, the average placement season this year lasted an interminable three months. Foreign placements too showed a negative trend. Last year, IIM Ahmedabad (IIM-A) placed 32 per cent of its students abroad. This year, the figure is 23 per cent. Needless to say, beyond the IIMs, there has hardly been any foreign offer. The downturn of the IT sector contributed. Last year, 27 per cent of graduates got IT jobs. This year, 17.
Now the good news. More professors are writing books and papers, indicating an increase in research. There has been a 17 per cent rise in the number of books published over last year, a 22 per cent rise in research papers and an 18 per cent rise in case studies. Industry interface has also improved, in terms of management development programmes (MDPS) conducted for executives and seminars and workshops held, an increase of 18 per cent and 26 per cent respectively.
Most of the better B-schools are investing heavily in improving infrastructure. The student-to-computer ratio, 4:1 last year, is now 3:1. The change in university departments is striking. Some of them are doing away with bureaucratic hurdles and tuning in to the latest trends, be it research ambience, integration with industry, infrastructure: FMS, Delhi, boasts air-conditioned classrooms; UBS, Chandigarh, has revamped its curriculum and increased financial flexibility, with student bodies empowered to utilise funds.
That’s the ambience part but the dearth of good educators is a serious problem, as reflected in the findings of our student satisfaction survey. Schools like ICFAI have moved proactively by starting an institute for faculty training. The shortage of good faculty, unlike infrastructure, is something which cannot be bridged in a short period by money. Poaching is on the rise. Holding on to good faculty may now become the real measure of good leadership.
But of all the trends, the most striking is the job crisis. Meet any fresh MBA from a below-top-20 institute and he will tell you how relieved he is if he has found a job. If not, the stock response is: "I’m weighing various options," a euphemism for "desperately seeking employment".
From dreaming of dollar salaries and foreign postings, MBAs have been brought down to earth, and with a thud. For campus recruitment, 2002 has been the worst year ever. There has been a dip of over 40 per cent and salaries have plummeted. Even in premier institutes, some pay packages have shrunk 25 per cent. Students from the second- and third-rung B-schools are accepting jobs that pay Rs 7,000-8,000 a month. The prevalent question on campuses today is not "what’s your take-home" but "have you got placed?"
According to Arun Tadanki, country manager of jobsite monsterIndia.com, the average number of job offers for students in the top 20 B-schools has come down from 1.6 per person in 2000 to 1.1 in 2002. "Some students from the top schools even went without a single offer, a situation that couldn’t be imagined two years ago." With dotcom CVs still floating around and companies freezing recruitment budgets, hiring a management trainee is seen as a luxury. "A fresh MBA today is an overhead that few companies want to take. If you hire an experienced hand, you get output right away," says Jaydev Parthasarthy of head-hunting firm Footprints.
According to students, this year XLRI invited 50 firms, up from 25 last year, to better the chances of placements. "Even those companies that literally had to return home from the airport last time as placements were over on the first day itself made it to Day One this year," says a fresh XLRI graduate. The Big Five consulting majors—McKinsey, KPMG, Accenture, Deloitte & Touche and Ernst & Young—were conspicuous by their near-absence. In the wake of the Andersen scandal, they have cut campus recruitment by over 60 per cent.Students spend anything between Rs 2 lakh and Rs 5 lakh for an MBA course and where earlier you could recover that money in a couple of months, today, it will take that much longer. "With international salaries sharply reduced, averages have come down to Indian levels. Earlier too, the averages were more a statistical deduction and never really gave the real picture," says K. Pandia Rajan, MD, Mafoi, a leading HR service provider.
Companies that visited the B-rung B-schools came looking to strike a bargain and made take-it-or-leave-it offers to students who were forced to accept. In fact, all MBA students this year were governed by a rule which prevented them from juggling job offers (not that there were plenty on offer). If you got one job offer, you had a day to decide on it and were then out of the placement process. "From the companies’ point of view, though, it reduced their chances of getting the best guys," says Dony Kuriakose of Edge Consultancy. In Pune, for the first time, many of the city’s business schools decided to go in for pool placement. CVs of students from all the colleges were sent to companies and only those short-listed were called to participate in group discussions and interviews at a common venue, instead of companies visiting colleges individually.
It is easy to blame it all on the recession but some fingers must be pointed at the B-schools themselves. "The mushrooming of B-schools has created a glut. In the last two years, we have seen 15 new schools in Tamil Nadu alone," says Rajan. "In the ’90s, a strong second rung of MBA schools appeared as the IIMs couldn’t meet the demand. Today, a dip in that demand has seen students from these schools go without jobs."
Another issue has contributed to the fall in MBA intake. If a company hired MBAs from both the first- and second-tier institutes, it faces serious internal equity issues after about two years. "Now that the second-tier MBA has also proven himself, he demands the same salary as his IIM colleague," says the HR manager of an FMCG company. So it was that many recruiters, this year, decided to stick to one kind of B-school to avoid such equivalence problems and hey! anyway, they only had a couple of guys to pick.
Gauri Bhatia and Premchand Palety
