Campus recruitments are down, and Indian B-schools are a failing business model, says ASSOCHAM paper

Do you think a Master of Business Administration (MBA) degree will fetch you a high-flying job? For the steadily increasing number of MBA aspirants, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has a myth buster. According to ASSOCHAM, barring graduates from the Indian Institutes of Management (IIMs), B-schools are fast losing shine, failing to attract India Inc. for campus recruitments. In fact, they are battling for their own survival.

An ASSOCHAM paper on “B-schools and engineering colleges shut down - big business struggles” reveals that only 10 per cent of business graduates are actually employable, despite the robust demand for MBAs. Only 10 per cent of graduates from Indian business schools, excluding those from the top 20 schools, get a job straight after completing their course, compared with 54 per cent in 2008.

According to the paper, since 2009, campus recruitments have gone down by 40 per cent. As a result of not being able to attract enough students, over 180 B-schools have already closed down in 2012 in cities such as Delhi-NCR, Mumbai, Bangalore, Ahmedabad, Kolkata, Lucknow, Dehradun, etc. Another 160 are struggling for survival, the paper adds.

Contrast

This is in stark contrast to the past, when MBA seats grew almost four-fold from 95,000 in 2006-07 to 3.6 lakh in 2011-12, resulting in a five-year compounded annual growth rate of 30 per cent. In the last five years, the number of B-schools in India has tripled to about 4,500.

But job opportunities for MBAs have not grown in the same proportion, as the MBA capacity in the country was built based on the projection of a 9 to 10 per cent economic growth rate, the ASSOCHAM paper says.

Similarly, the demand (and quality) of the Master of Computer Application (MCA) course is also on the decline. Nearly 95 colleges stopped offering the programme in 2012 and only 25 started MCA courses, the paper revealed.

Reasons

What are the reasons for the downward trend? “The biggest reason is the rapid mushrooming of tier-2 and tier-3 management education institutes that has unfortunately not been matched by commensurate uplift in the quality of management education. Most students prefer to choose cheaper AICTE-approved programmes rather than B-schools”, said D.S. Rawat, Secretary General, ASSOCHAM. He added that there is no quality control, the placements are not commensurate with the fees being charged, the faculty is not good enough and there is no infrastructure.

The paper on B-schools also showed how students expressed their displeasure about their schools promoting themselves by boasting about placements and high salaries, and also revealed that the students are also not concerned about the quality of education in an institute, they only want to know the placement and salary statistics and discounts offered on the fee structure.

Academics’ opinion

While the industry is pointing fingers at the colleges, the academics are holding the corporates responsible. Janardhanam K., Director, Canara Bank School of Management Studies, Bangalore University, spoke about the reluctance of the corporates to participate in academics.

“Also, the cost of recruitment is more for MBA graduates (selection, identification of resources, etc). The corporates have changed their preference for recruitment from PGs to UGs as they say there is better talent available in the UG market and the choices are more there, as nearly one lakh students graduate from UG management courses every year. In the case of MBA, there are fewer choices,” he explained.

Prof. Janardhanam also said, “There is also generalisation of the job market – any graduate is now okay for junior-level jobs. But for the middle and above middle levels, the expectations for MBAs are high.”

He said that at the Canara Bank School, in 2012-13, six government companies had approached for recruitments, which is a stable number.