Bansal is in the middle of an online pre-orientation. Classes are expected to start soon, online again. The e-experience isn’t something most students would have bargained for. Bansal, nevertheless, hoped that by the end of the course in 2022, she would pick up skills that would polish her into a better professional. She expects to be offered a job with an annual salary package of ₹17-18 lakh, more than three times what she was drawing in her last stint, as a brand executive in an e-commerce firm.
Like Bansal, millions of Indians continue to see value in an MBA degree every year. Not only is it a shot at a better pay, in a good deal of cases, the degree is a passport to switching careers. Of course, everything depends on the reputation of the school, what is taught, the alumni network, and the sort of companies that knock on the door during campus placements. India has nearly 5,000 management schools and by most accounts, an overwhelming majority of them are mediocre institutions that don’t add much value to CVs.
India produces upwards of 400,000 MBAs a year. Only in 20 schools is the starting salary more than the fees paid. And only 19% of the MBAs are technically qualified to take up jobs, Shiv Shivakumar, group executive president of corporate strategy and business development at Aditya Birla Group and a former president of the All India Management Association (AIMA), informed.
The long tail of mediocre B-schools now faces a crisis. On the demand side is a tight employment market. Campus placements are usually conducted between December and April. According to AIMA, many management institutes have either halted or left the placement process incomplete in 2020 because of the lockdown. Most tier II and III B-schools are still struggling to place their students. Students who joined schools in 2019 may not get good internship opportunities. This will have a direct impact on the final placement of 2021, the body stated.
On the supply side, intake of students for one-year courses hangs in the balance. There is uncertainty about the path of the economic recovery and by extension, the jobs market next year.
The better schools are better off. Mint, in January, reported that the average salary offer was up 7-15% in top B-schools compared to the last placement season. But even they need a pivot. Online delivery of content is a new beast and professors are ill-prepared. Schools need to refresh what they teach as well as create new content since business models have undergone dramatic shifts in under two months.
India’s best management schools are mostly stand-alone institutions. Both academics and employers are questioning if they are capable enough to prepare students for complex problems in a world that is seemingly more multi-disciplinary.
Sunil Kant Munjal, chairman at Hero Enterprise, pointed out that three themes are consistent with every company at the moment. Every business is inducting more technology, building a new level of efficiency in operations and a completely new cost model. “If business schools are not teaching these, they will get left behind," he said. Munjal is the chancellor of BML Munjal University and is on the governing council of IIM Ahmedabad and on the board of ISB.
The black swan event has raised yet another question: Are Indian business schools equipped to train people to expect the unexpected? “The reality of life is that this is not the last time we will see a crisis. We will see more of them, whether it is due to climate change, technological changes, or cultural and social changes. The best and the smarter schools have to make this as an inherent part of their curriculum—plan for the unplanned," Munjal said.
The supply conundrum
Mudit Gupta is a consultant with India’s ministry of statistics and programme implementation where he works on complex surveys. He is thinking of doing an MBA—next year. “I am looking for an international business management programme for next year. Universities are offering an e-experience currently, which is not very valuable," he said. Gupta would much rather prefer networking with batch mates, the old-fashioned style. “I want to get out and interact with peeps around. MBA is all about peers."
That’s one of the challenges B-schools face in 2020. Besides interactions with like-minded students, an MBA class gains from interactions with rockstar faculty and a great campus life, which is intellectually stimulating, pointed out Shivakumar. “If I am doing an MBA this year, the experience will be very different because the bulk of the courses will be online. Students will ask if they should be paying ₹15-25 lakh for a reduced experience. Deferrals will be big," he said.
There are more nuances to the supply conundrum. There are broadly three types of MBA programmes. The conventional two-year course that is preferred by freshers and those with work experience of less than three years; a one year-degree that is tailored for professionals with work experience of four-five years or more. A third category is part-time programmes.
While the demand for MBA programmes that don’t require prior work experience are expected to remain stable or even increase, B-schools that require work experience may see reduced intake in current circumstances. Why is that? “If a person is already in a job, he would think twice before letting go and joining an MBA programme in 2020 given the economy. Keeping the job is a big deal now," Rekha Sethi, director general at AIMA, said.
In a good year, short-term management programmes are a hit with working professionals because they have to take only a year’s break from work. Recruiters seem to like it too but 2020 is tricky.
“A top class one-year programme is superior to a two-year programme. The reason is that these programmes usually admit experienced people. From a recruiter’s perspective, it is easier to integrate a person who has already worked into a working environment versus someone who has never worked. This is why one-year programmes have a decent demand in terms of placement," A.K. Balaji Prasad, managing director of Drshti Strategic Research Services, a market research company, said. Prasad is secretary of IIM Calcutta’s alumni chapter in Mumbai. “However, now, two-year programmes would be preferable because by the time you are getting out, the economy would have had time to recover," he added.
So what happens to the long tail of mediocre institutions given the short to mid-term challenges? Their student intake is expected to dip but many of them would continue being afloat. Education is recession proof in India considering the country’s young demographic. “In a crisis time, you need more hope. Educational institutions are organizations of hope. That’s why parents and young kids will continue to come to these institutions— despite the fact that many of them provide low-level, low-quality education," Pankaj Chandra, vice-chancellor of Ahmedabad University and a former director of IIM Bangalore, explained.
What to teach
Around September of last year, Rishikesha Krishnan, professor of strategy at IIM Bangalore, taught case studies on the airlines industry and on Uber. The discussion on airlines revolved around competitive dynamics and commoditization; Uber was about how the company disrupted private transport.
Then, the pandemic disrupted the disrupter—private transport is expected to make a comeback as people avoid shared mobility. And airlines companies face a sudden deep drop in demand. Content relevant a few months ago has gone stale. New content, therefore, has got to emphasize more on such contingencies and business continuity planning. Krishnan thinks the importance of resilience, managing crisis and climate change will be underlined in bold.
This is not just true of Indian schools. Global B-schools appear to be preparing for such changes, too. Vijay Govindarajan, Coxe distinguished professor of management at the Tuck School of Business at Dartmouth, and Anup Srivastava, Canada research chair at Haskayne School of Business, University of Calgary, both seem to think that currently, schools focus a lot on “algorithmic learning" or where there are predetermined answers to predetermined questions.
Schools will have to reduce emphasis on algorithmic learning and increase the emphasis on “higher order skills", they stressed in an email response to Mint’s questions. These skills include creativity, empathy, leadership, conflict management, strategic thinking, understanding technological progress, disruption, crisis management, problem solving, and dynamic decision making among others.
Meanwhile, the dialogue around business ethics is expected to get sharper in India post the migrant crisis. For the last few decades, businesses have practised a very narrow kind of capitalism, which is to deliver financial results and profits. This drives the share price and total shareholder return (TSR). Rewards for executives are aligned to these goals, Anjali Bansal, founder of Avaana Capital, pointed out. Bansal is on the governing body of SP Jain Institute of Management and Research.
“However, we need to have a greater focus on ethics, values, sustainability, building responsible businesses versus building just a business. Companies are talking of ESG (environment, sustainability, governance) goals, diversity and inclusion, being responsible. The leadership is expected to deliver on these goals," she said. “It is a good time now to include this as part of the learning and development agenda in companies, both to educate and train the leaders as well as passing it on to their juniors who they mentor," she added.
A few academicians see a bigger role for management schools in the future. B-schools could metamorphose into a platform for dialogue between the government and other stakeholders such as businesses and NGOs, Rajendra Srivastava, dean of ISB, suggested. That could help resolve complex problems like the pandemic India is grappling with. Srivastava also spoke of a “life-long learning contract" with students, going ahead. The speed of change and uncertainty implies that executives would need to refresh what they learnt every few years. That could mean shorter but more frequent executive management programmes for the alumni.
“We should be teaching how to manage crises. Then there is new technology such as the Internet of Things and blockchain. Someone who has got their MBA 10 years back doesn’t have this as part of their toolkit," the dean said.
The rise of tech
The ministry of human resource development’s National Institutional Ranking Framework shows an interesting trend. IITs and other technology institutions that offer management programmes are climbing in the pecking order. In 2020, there are seven technology institutes in the top 20 when it comes to management rankings. There were just two in 2016. Recruiters see this trend accelerating post the pandemic with every company in the middle of a digital transformation—tech institutions are set to become a bigger force in management education.
“Only in recent years have we seen tech institutions such as IITs, NITIE and NITs gain prominence in management education. This is because 15 to 20 years ago, strategy and management consulting were considered two sides of the same coin. Subsequently, this shifted to strategy/management and operations consulting. Today, strategy/operations consulting and technology have become two sides of the same coin," Ramkumar Ramamoorthy, chairman and managing director of Cognizant India, said. “In this changed context, no strategic road map or business process reimagining exercise can be undertaken without a deep understanding of what digital and related technologies can do to the organization," he added.
More competition for the top stand-alone B-schools isn’t such a bad thing. It could force them out of complacency and aid in pivots, much like the businesses they supply talent to have done in recent months.