The last five placement seasons have brought in good news for B-schools. Every successive year has seen an average growth of about 20-30% in salaries that students from top B-schools get. However, the coming placement season may not bring much cheer for them.
As in some B-schools the placement season begins as early as September, their pre-placement communication with prospective recruiters is already on and the industry’s pulse is registered. Having visited quite a number of B-schools this year and having interacted with their directors and placement officers, the message I got is that the economic downturn in the economy is going to be mirrored in the placements.
Says H. Chaturvedi, director of a top-ranked B-school in Greater Noida, the Birla Institute of Management Technology, or Bimtech: “Barring about top 25 B-schools, there won’t be 100% placement in campuses. Even pay packages will drop by over 20% in most campuses.”
A.K. Sengupta, director of SIES College of Management Studies in Navi Mumbai, whose students have been getting good placement offers for past few years, echoes the sentiment. According to him, some of the companies that recruited from their campus last year are showing concern this year.
Some companies are even finding it difficult to honour their commitment during last placement season. In one B-school located in Noida, for instance, a general insurance company belonging to a big Indian industrial house has tripped up on its commitment. The company had offered students jobs for a package of Rs5.65 lakh per annum. First they deferred the joining date of students by three months, then they offered them jobs in another group company with a reduced package of Rs3.5 lakh per annum.
C.S. Somu of SDM Institute of Management Development in Mysore, where information technology, or IT companies, were the major recruiter last year, also opines that the going won’t be good this placement season as most of the major IT companies are planning to cut their manpower requirement drastically. B-schools such as his are now looking for new recruiters.
There are also some who don’t agree that the downturn in economy is going to hurt placements in a big way. A. Balasubramaniam, CEO of Balaji Institute of Modern Management in Pune, who is known for getting good placements for his students, says: “The jobs in IT sector would be hit but it would be compensated by other growing sectors like telecom, insurance, retail and banking.”
Mani Bharadwaj, senior director in Deloitte Touche Tohmatsu, an audit and consulting firm, also believes that the downturn in the economy is a temporary phenomenon and will, at best, have marginal impact on placements. His company, which recruits from different campuses in the country, is not planning to cut down on its manpower requirement.
“The problem with most B-schools here is quality. We are looking for MBAs who can get into the act very quickly. For those B-schools which are proactive in moulding their students according to the needs of industry, placements won’t be a problem,” says he.
For the past five years, many B-schools had a good time as the demand-supply gap was huge and placing students was not a major issue. Many companies blindly picked them up as they had not much option. Now they are going to be choosy. Only those B-schools that have a strong industry interface will be able to manage good placements for their students. One recent positive development has been that some companies such as Tata Consultancy Services Ltd, Infosys Technologies Ltd, HDFC Bank Ltd, Pantaloon Retail (India) Ltd, ICICI Bank Ltd, Satyam Computer Services Ltd, Polaris Software Labs Ltd and Cognizant Technology Solutions are now tying up with some B-schools and engineering college to have a more meaningful relation than just picking students during placement season. In Bimtech, for example, HDFC Bank has offered a special module in banking for final year students. Some 43 students have enrolled for the programme. HDFC Bank officials are conducting the programme to train students according to their needs. After the programme, the students will have to undergo a test based on which they will be recruited.
In 2000, a similar downturn happened and it lasted for more than two years. So my advice to students who are thinking of joining a lower-rung B-school is that they should carefully check its credentials and not go by misleading advertisements. Some B-schools are giving false placement figures in their advertisements and also using “motivated” ranking surveys as a bait to lure prospective students. The fee they charge is between Rs6 lakh and Rs8 lakh for the full course. For those taking loans, the repayment instalment ranges from Rs10,000-20,000 per month. From the point of view of return on investment, it is not advisable for students to join any B-school that doesn’t promise them at least Rs40,000 per month in salary when they graduate.
Premchand Palety is director of Centre for Forecasting and Research (C fore) in New Delhi, from where he keeps a close eye on India’s business schools. Comments are welcome at firstname.lastname@example.org