The MBA bubble had to burst, it’s too late though!!

Now admission is open round the year -
but where are the students?

Circa 1982: If anything that an Indian graduate in science, commerce or economics would have dreamt of to finish his/her academic qualification in style, it would have been surely a master’s degree in business management. It had been a dream nurtured since his senior school days even before he had written his secondary examinations, in some cases, fumed by the likes of his uncle or one of his cousins, who made it big after completing his business studies. Wow, the dream of fat pay checks, glamour, luxury, social status – it was a fairytale career waiting for those who could walk through the competition seamlessly keeping their head and nerve still.

Circa 2002: If anything that an Indian graduate in science, commerce or economics would dream of to finish his/her academic qualification in style, it could be a master’s degree in business management. “They say it’s too easy to get through an MBA these days and I may consider finishing my master’s in commerce first and work for a couple of years before trying to get into a good executive MBA later. Pay-checks, glamour, social status?? Yeh, they are there no doubt, but then there is no differentiation. It seems everyone wants to do an MBA these days!!”

This bubble burst can hurt a lot more
than the dotcom burst!

Circa 2012: If anything that an Indian graduate in science, commerce or economics would not dream of to finish his/her academic qualification in style with, it would surely be a master’s degree in business management. “How would I know which is a better institute, with everyone claiming themselves to be the best, everyone providing a laptop, sending students for a foreign tour, getting professors from abroad, etc etc…?” With every institute in the market, aiming to be a me-too, trying to ape one another, there are just a few serious players left out there, who still guarantee serious academic pursuit. A few ‘good’ institutes mean a shortage in supply and (strangely still!) a sizeable demand for admission. 

Going out of business - it's just
the tip of the iceberg, more to follow soon

When The Times of India reported (on Monday 8th October, 2012) the news about 225 B-Schools and over 50 other technical institutes which have shut shop in the past 2 years, the news never came to me as a rude shock. With the mushrooming of B-Schools across every nook and corner of the country, catering to every possible tiers (Tier A, B, C and god knows how many more!), cutting through every SECs (the MR firms can only interpret that), MBA was no more restricted to a select few – academically brilliant, financially sound, intellectually outstanding. Although, there was no merit in making a professional, higher education system accessible to a select few based on academic or financial background (which was truly condemnable as it made higher education more elitist and cartelized) – as the need of the hour for a resurgent Indian economy was and is a large pool of well-trained and well-groomed executives with sharp entrepreneurial/business acumen – but unfortunately, many later players who entered the MBA ‘industry’ soon commoditised this form of education and made it ‘just another’ business venture.

These non-committed edupreneurs (an entrepreneurial venture in education started by an individual who dreams of making it big like a Gates or a Jobs in IT), neither had any hindsight nor any foresight. Till the time, the market was ready to gulp down anything that was thrown to them, they were all ready to pump in the required investment and settle for a strong bottom-line. Mind it, it was just another business transaction for them. So, there were the creamy layered farmers (from the green belts of India), the pot-bellied and once-upon-a-time warlord-turned-politicians and various corporate houses (why not take advantage of the tax benefits) who made a ‘frog-line’ to water and nurture the ‘mushrooms’, that would make MBA education ‘open to all!’

Made in india MBAs are a
hot commodity in the U$ markets

There was a belief, once upon a time, which echoed the feeling that if you restrict access to higher education (read: MBA) to a select few, then the institutes, which do so would be deemed the best in the business. So, institutes of ‘national importance’, with an aim to stamp their superiority, were soon formed and they started to create the sharpest of business executives to drive the Indian growth story, although most of the students from these institutes preferred to show their commitment to the cause of American growth, once they all graduated. Thus the outflow of ‘Made-in-India’ talents went on uninterrupted to fuel the American Dream, leaving the political pundits back home to debate on why India is still growing miserly (during the mid 80s)? Then came in the first of the several influxes of B-Schools. Many wanted to ape the already existing ‘institutes of national importance’ and framed a curriculum very similar to theirs. But the results were more or less the same - the growth of B-School seats failed to match the growth of applications for MBA programmes. The end result: more ‘Made-in-India’ MBAs were manufactured to oil foreign economic machineries leaving behind a few back here in India.

100% placement - a reality or
just a chimera!

India Inc, by the mid 90s, enthused by the post liberalization growth prospects, started to demand for trained manpower to drive their bottom-line, which obviously India had a shortage of by then. Like yet another Ice Age of yore, came another influx of B-Schools in the Great Indian MBA market, opening the floodgates to hundreds of thousands of applicants and making MBA education more accessible. Everything looked perfect till this point of time. The market had a large demand for MBAs, the supply side was also more or less balanced, young graduates beaming with confidence in their black suits were walking out of campuses to secure a job – things could not have been better for the MBA market. But the honeymoon did not last long. Soon a report published by FICCI lead everyone to sit up and take a note of the fact that although the market was strewn with MBAs, but most of them lacked the knowledge, the skills, the attitude and the temperament to push India’s growth story to the next level. The bubble had started to burst. More MBA seats meant more students to apply, quality standards in academic delivery was horrendously compromised due to shortage of faculty, easy loans gave people from every section of the economic strata the freedom to dream for an MBA career (don’t forget the facts that people went to the extent of mortgaging their land, properties and gold to avail such loans), companies of all sizes realized that only a handful of the end-products from these MBA schools were worth the salary paid, while the rest were of minimal value – thereby forcing them to stay away from campus, leading to negative demand in the job market and rising number of unplaced B-School graduates. Students securing placements were either getting them off campus through references or in jobs at the salary of a general graduate.

The bottom line:

In the next 12 months, there is a high likelihood of many more of the small, medium and even large B-Schools to shut their operations. Student volume has depleted considerably because of alternate training and skill enhancement opportunities that graduates (BCom, BSc, etc) are availing at a fifth of the price paid for a full time MBA programme. Employers prefer visiting college campuses to pick up these graduates, train them in their processes and absorb them at a cheaper rate compared to low quality PGs with a self-flaunting MBA tag.

In the coming years, two things are going to shape the market for MBA programmes:

1) Larger educational groups will consolidate their positions by acquiring smaller/medium players, thereby getting access to their facilities and infrastructure and reaching out to a larger market under a common brand name, and

2) Fringe players will concentrate on niche markets by offering specialized MBA curriculum to cater to specific market needs, instead of producing MBA in marketing, HR and finance in hordes and ending up piling some more bad assets!

Government’s Role:

The government should work selflessly, without worrying about vote-bank politics or political alliances, in redrafting a policy framework to reform higher education in general and professional studies (MBA/MCA, etc) in particular. A higher education regulator like SEBI or TRAI needs to be formed to register every institute working in the domain of professional higher education and lay down measurable guidelines for institutes to offer professional programmes. This regulator should not be manned by bureaucrats, but instead by academicians and corporate representatives and should function like a professional body, independent of interference from the HRD or the state technical education department. Such a committee should also offer advisory services to institutes in meeting operational efficiency, faculty training, student-skill development, and placement, among others. Accreditation bodies like AICTE, NAAC or NAB need to be abolished as a process of accreditation is the most corrupt means to asphyxiate growth, while the guidelines formulated by the regulatory body should not be based on size of campus or numbers of common rooms, but should be more inclined towards intellect development, pedagogical improvement and development of faculty quality.

Need for educational Think Tanks:

Let's think big, for a change!

Almost every other sector – defence, foreign policy, economic development, commerce, etc. has its own sets of think tanks, which work parallel to the government machinery, often providing key inputs, lobbying for some specific causes and actively generating public awareness. Educational Think Tanks, if any, have till date failed to generated the much required momentum in addressing the government apathy to education as a whole (which is reflected from its miserly allocations at the Union Budgets, year after year and more so from its wretched attitude in bringing about large scale reforms).

This article is not intended to enrich the readers with the facts plaguing the MBA scenario in India, much information is available in various forms online and offline. This article intends to generate the much required buzz among like minded professionals from the academic world to join hands and offer new insights to the government and the general public with a view to strengthen the MBA infrastructure in India - there is of course no denying the fact that the programme, if delivered with the right intent, in the right manner, with the right content, would make the right candidates ready for the right placement opportunities.