India boasts of more than 3,300 odd institutions offering an MBA with a sanctioned intake of four lakh plus, which is the highest globally. Why has MBA thrived in India? What has been the performance of these programmes?
The MBA flourished in India because the undergraduate qualifications failed to produce employable graduates, barring a handful of the institutes, and MBA became a gateway to the first job. According to Aspiring Minds, an employment solutions company, as many as 97 per cent of graduating engineers want jobs either in the field of software engineering or core engineering. However, only 3 per cent have suitable skills to be employed in software or product market, and only 7 per cent can handle core engineering tasks. With around 15 million youngsters entering the workforce each year, corporate India and research institutes seem to agree that 65-75 per cent of them are either not employable or not job-ready.
Dips and downturns
Moreover, a recent ASSOCHAM study revealed that only seven per cent of the B-school graduates in India are employable. This is not surprising as only 12 institutions in India have global accreditations, such as AACSB or EQUIS. In the absence of quality, it is inevitable that more than 40 per cent of the sanctioned intake remains vacant across institutes in our country.
It is interesting that globally, the number of applicants to MBA programmes was down for the fourth year in a row in 2018, a trend now affecting even the most elite universities. Applications for US business schools were down seven per cent from the previous year, as the Graduate Management Admission Council (GMAC) found. Top business programmes such as Harvard, Wharton, and Stanford had been considered immune to the MBA downturn, but they also saw drops in applications this year, 4.5 per cent, 6.7 per cent and 4.6 per cent, respectively.
Glaring gaps in business education
In stark contrast to the MBA, , the Masters in Management (MiM) programmes showed the sixth year of continuous gains in the volume of applications pouring in, according to GMAC's market intelligence. Designed for those at the beginning of their careers, MiM is taken by students with an average age of 22 years. About 60 per cent of MiM students have no work experience and around 30 per cent have work experience of fewer than two years. Globally, MBAs are for professionals with several years of work experience under their belt. If we look at India, MBA programmes are more like MiM programmes abroad, preparing students for an entry-level position in their professional career.
Unlike the US, very few of the top B-schools in India have a bachelor’s programme in business, which forces aspirants to look for a career in business or to go for an MBA. It is worthwhile to note, that the gap between placement outcomes of the undergraduate and the postgraduate business programmes are not so wide. The average annual base salary for the undergraduate class of 2018 was $75,068 at the University of Virginia and $43,100 at the State University of New York at Albany.
Need for BBA
It is apparent that there is an urgent need for good business bachelor programmes in India, in sync with the developed countries. With the New Education Policy (NEP), the undergraduate programmes will be fully polished. Four years should be a good time frame to create professionals, who may not require an MBA immediately post their BBA. Management institutions will need to diversify into multiple disciplines, including arts, humanities, science, sociology, design, law, and so on.
Question is, who can take the lead? It is incumbent on the top schools, especially the ones benchmarked with the global standards, like AACSB/EQUIS accreditation, to set the standards, with futuristic curriculum, pedagogy, faculty, and global partnerships.
We have taken a step in this direction. The BBA programme of IFIM Business School from the newly- launched Vijaybhoomi University offers a broad basket in the first two years, which include areas like social sciences, humanities, language, performing arts, design and science before they get into their business courses. With the launch of such BBA programmes, will the MBA in its present form survive?
(The author is Director, IFIM Business School.)