B-schools: Course correction?

Old-timers of the B-School fraternity in the country will tell you that, among the set of global business analysts and commentators who are often quoted in the casual and formal conversation with the students to indicate the trends of the future, it’s Alvin Toffler (author of The Third Wave and Future Shock), the noted American writer and futurist of the 20th century, and his prophecies that have been quite a formidable reference point.

‘The illiterate of the future are not those who can’t read or write but those who cannot learn, unlearn, and relearn,’ has been a popular theory and, today, in the digital age that has triggered unprecedented churning, it is proving to be bang on the target. Quite interestingly, those who have been citing the merit of Toffler’s learn, unlearn and relearn theory themselves seem to have been pushed to a point, where they need to translate the essence of this theory in action. 

The recent placement hurdles, low-to-nil growth in average salary offtake and high attrition rates (both for MBA and engineering students) have emerged as serious challenges even for some players with the coveted top of the tree positioning. In an age where digital shift has created a lot of uncertainty, a clear picture of how the employment scenario will unfold is yet to emerge with clarity.

The lack of co-ordination between academia and industry (especially for institutes in the mid-tier) and somewhat muted growth conditions in the marketplace are also adding to the confusion. The good news is: the big boys of the game may have seen the writing on the wall. But those who are placed in the middle or the bottom strata, dealing with this unlearning and relearning exercise could well be an existential challenge.        

USP under threat? 

There is no gainsaying that, in a country, which is struggling to scale up its gross enrolment ratio and bringing a larger population of youths to the higher education fold (targeting 50 per cent by the end of this decade as per New Education Policy released in 2020), IIMs and IITs are looked as the pinnacle points of the learning value system. The edifice is, of course, supported by a host of other institutes.

In totality, the management studies universe is quite large in a quantitative sense. As an analyst points out, the landscape of Indian management education is quite wide and complex that produces over 430,000 management graduates every year. The 3,246 AICTE approved institutions offering full-time management programmes come in various configurations – such as ‘standalone, autonomous and single-discipline institutions’ (22 IIMs, 330+ PGDM institutions); ‘single program single discipline institutions’ affiliated to state/Central Universities; ‘department of management studies’ at engineering institutions (IITs, NITs and several other engineering colleges); ‘B-Schools’ at private universities, etc.

Any student seeking an admission in IIM or IIT for engineering courses is simply on a dream run as, going by popular perception, it means ticket to a high-end career, not only domestically but in extremely high-paying developed markets.

Consistent rise in average salary take-off and guaranteed placements have been considered to be key hallmarks of these institutes. And it’s not only IIM or IITs, some of the other premier institutes from other configurations have also been credited with acquiring these deliverables quite successfully.

But it is this USP – popularly cited as 100 per cent placement – seems to be under attack now. There are clear indications of placement problems faced by most of the institutes both on the MBA and Engineering side. 

The annual edition of Deloitte’s campus placement survey (a broader spectrum that comprises MBA, engineering, pharma, etc) released in May 2024 had pointed at the weakening signs in recruitment. “For the first time in five years, this year’s projected salaries for management students (MBA) are experiencing a drop of 5-10 per cent across tiers.

Notably, the expectation of salary by campus students is also experiencing a similar decline,” the survey had revealed. Another sore point highlighted in the survey was rising attrition rates especially among MBA graduates. According to the survey, it has soared to a high double-digit proportion (on ‘less than a year’ to ‘two years’ parameters). 

“This year’s study reveals a critical need for organisations to rethink their retention strategies, especially for MBA graduates, where attrition rates are alarmingly high. Innovative practices are no longer optional but essential for retaining top talent in a competitive market. It further reveals that currently, four of every five executives favour decisions on hiring, pay, promotions, etc, based on skills over job history or network, citing reduced bias and improved fairness. Thus, there is a need for educational institutions to equip students with the multifaceted skills to succeed in the digital age,” remarks Neelesh Gupta, director, Deloitte India.

When it specifically comes to the MBA placement, an online agency keeping track on the placement and salary trends in the leading IIMs and other MBA institutes had released a note around July end, which points out a marginal decline in the median-to-average salary of leading signposts of the firmament, even as top-notch IIMs had completed 100 per cent placement.

But any industry insider will tell you that some regional IIMs and other leading institutes including private have been struggling in the last couple of years to deliver on points which build their reputation. 

The scenario in the recent past has been such that several analysts have started calling it the serious emergence of placement puzzle, something that used to be the sole attribute of mid or low-ranking institutes. And a 100 per cent placement tag, the traditional parameter to judge the performance of any MBA institute may be under threat.

“For top IIMs, I don’t see any challenge in 100 per cent placement. But in an overall sense, the volatility of placement will increase,” says Rishikesha T. Krishnan, director, IIM Bangalore. “There is no puzzle here. Placements are a natural outcome of a robust teaching-learning process. Our curriculum is regularly updated to reflect the changing industry trends and ensures that our students are well-equipped with knowledge and skill-set that the industry demands,” asserts Archana Shukla, professor & director, IIM Lucknow.

Strategic shift 

Being the leaders of the pack may be playing in favour of top-notch IIMs even as they are facing issues on salary appreciation front for their recent batches, senior educationists believe that the 100 per cent placement tag is increasingly losing its validity in the MBA universe.

“It is a myth which has lost its relevance. The growth in recent decades (2000 onwards) which created the demand for fresh recruitment has created this which has been further fuelled by the media hype. It happens nowhere else. How can an institute guarantee 100 per cent placement? Can anybody guarantee that there would be consistent economic growth and there would be no economiupheavall?” counters Harivansh Chaturvedi, director general, IILM.

Arvind Sahay, professor & director, MDI, extends the argument: “Traditionally, the parents and students have always expected that it is the responsibility of the institutes to get them placed. It’s a wrong notion. For any reputed institute, the real challenge is to ensure that we create a manpower pool which is more capable to deal with market dynamism and volatility”. 

The issue of employability has been a serious concern in the past and if one may recall a report by industry body Assocham released in 2016 had created quite a flutter, when it had underlined that only 7 per cent of MBA students are qualified to serve in the marketplace.  And the situation seems to have partially improved. 

The Economic Survey 2023-24, presented in Parliament on 22 July, had revealed that only 51.25 per cent of India’s graduates are deemed employable, highlighting a significant skills gap despite the fact that this is a definite improvement over last decade’s 34 per cent. This data underlines more of a micro trend which obviously includes all domains. 

Coming back to the current scene in the MBA market, where corporates do have a strong stake, the much talked about industry-academia collaboration also does not seem to be in fine fettle. “Corporates want candidates who can hit the ground running from the word go. Earlier companies, particularly in the FMCG and IT sectors, had their own extensive training programmes for the candidates selected by them, which used to run for several months, but that is not the case now,” Sahay points out.

But the industry on its part believes the MBA institutes in general are not doing enough to update and upgrade teaching standards which could provide them with candidates who could be assets for a scenario defined by dynamic churnings.

“Many institutes, including some with good reputation and long standing are not showing dynamism when it comes to read the writing on the wall. They are still sticking to the old modalities. Now we need the managers with all-round competencies (digital, domain expertise, execution, relationship management, etc) and this can’t be ignored,” says HR head of a leading consumer firm. 

This is not to say that any strong sense of bitterness has percolated down to the collaboration equation between the two sides and there are institutes which maintain that they are making the most of this critical element in the equation.

“The engagement between industry and academia is becoming increasingly dynamic and beneficial, leading to more substantive partnerships. This is evident at JGBS in several ways: first, our faculty have a combined 285+ years of practical industry experience at top companies (BCG, Deloitte, Accenture, etc), bringing real-world expertise directly into classrooms. Second, we host around 800 industry guest lectures on a per year basis, showcasing experts from major players like KPMG, BCG, Capgemini, Microsoft and Amazon, demonstrating a clear institutional commitment to providing valuable, up-to-date context across all programmes. Lastly, JGBS ensures our 1,500+ student internship programme incorporates real-world exposure,” informs Mayank Dhaundiyal, professor & dean, Jindal Global Business School. 

Critical cornerstones

But there is a larger feeling within the academic fraternity that course correction is imminent today, not just in curriculum but in the entire approach and strategy.

“If you look at the operational corporate landscape, skilling, reskilling and upskilling is increasingly becoming the new norm. For us on the academia side, the key challenge is to implant in students a ‘growth mindset’ rather than ‘fixed mindset’,” observes Bhimaraya Metri, director, IIM Nagpur, and a noted educationist.

While bringing in the new orientation is a macro point, other leading members of the fraternity point at three-four critical cornerstones of the desired makeover. The first major cornerstone pertains to better alignment with the digital era. “Curriculum is now tuned to integrate artificial intelligence, big data, cloud computing, block chain, etc,” says Netra Neelam, director, Symbiosis Centre for Management & Human Resource Development (SCMHRD).

And this is to ensure that the students are well equipped to perceive a pathbreaking tool like AI as an opportunity and not as a threat in his/her work-life. “AI will not take away your job but someone knows the value and use of AI may take it for sure,” adds she.

“The candidate also needs to have expertise in data crunching so that he could evolve as a problem solver on his own. In tech driven businesses like e-commerce, banking and finance, or even logistics management, this has become a must now,” points out the placement head of a leading institute.

Another critical pillar relates to preparing the MBA students to robustly contribute to their future organisations in meeting their ESG (environmental, social and governance) goals, something that has become mandatory for every responsible organisation considering the climate change and sustainability imperatives and specific regulations, which have come up in different countries.

“This is increasingly being absorbed in leading B-School curriculum. Though it is yet to find a centre-stage positioning but it is not at a nascent stage as well,” affirms Rishikesha T. Krishnan. According to Himanshu Rai, director, IIM Indore, the social bit of ESG is now being given equal emphasis.

“Business schools are emphasising ethics and social impact, reflecting a broader shift towards training leaders who can align corporate success with societal well-being. For example, IIM Indore’s Rural Engagement Programme allows students to live in the villages, understand the challenges of rural India, and offer solutions,” he explains.

And this practical learning model by briefly becoming part of different communities and societies popularly known as practicum model of learning in Europe is now a major functionality, which B-Schools are aiming to include to their teaching portfolio. 

“Our approach goes beyond short-term job placement, focussing on developing a broad skillset for long-term career development. This ensures our graduates remain adaptable and relevant in an ever-evolving job market,” says Debashish Chatterjee, director, IIM Kozhikode.

What Chatterjee says, in fact, is the key mantra for all leading institutes for their new orientation where long term employability is the key pursuit. And it is reflecting in action galore which institutes have undertaken in the past. Take the case of Kozhikode. It is seeking to revolutionise its placement process by launching the CARE initiative, which has three components – corporate access, corporate readiness and corporate engagement. 

IIM Lucknow is trying to strengthen its Enterprise Incubation Centre that hosts over 110+ start-ups. It is also planning to start a Centre of Excellence in Blockchain Technology (CoE-BT) supported by the government of Uttar Pradesh under the Start-in-UP Policy that will nurture 100 start-ups in the blockchain domain over the next five years in the state.

There is also a growing buzz on improving the behavioural competency or mental robustness of students in the MBA management fraternity and on that front IIM Lucknow is now also developing mind labs under the aegis of its unique Centre for Happiness to study the science of happiness.

“Key electives such as wisdom of Indian philosophy, cultivating and sustaining happiness, leadership journey in times of change, etc, are crucial in preparing future leaders to handle challenges with grace and equanimity,” says Shukla. 

Along with its rural engagement programme, IIM Indore has also initiated Himalayan Outbound Programme (HOP), which intends to complement its focus on experiential learning. This programme takes students to the Himalayan region, where they engage in adventure activities and community service.

The institute has also introduced the MBA Thesis Track that allows students to undertake substantial research projects in their area of interest, culminating in a thesis that contributes original insights to the field of management. Similarly, International Management Institute (IMI) has undertaken a new initiative to pave the way for outside class room experience by provisioning social credits for them.

“At IMI New Delhi, we recently launched a compulsory program called Sustainability and Social Impact (SSI) for all MBA students starting from the 2024-26 batch. Each student must earn social credits alongside their academic credits to graduate. This programme is designed to ensure that students are not just focused on business metrics but also understand their societal responsibilities,” informs Himadri Das, director general, IMI. Engagement with local schools, village outreach and collaboration with NGOs are critical pillars of this programme. 

XLRI, a premier MBA institute, which has campuses in Jamshedpur and now also Delhi-NCR, is also scaling up its XCEED platform, the campus incubator. “XCEED supports the development of early-stage startup companies led by XLRI students, alumni, and faculty. Our incubator offers a comprehensive set of resources and services designed to assist entrepreneurs in turning their ideas into successful businesses. We understand that starting a company can be a difficult and uncertain journey, which is why we strive to create a supportive and collaborative environment that fosters innovation and growth,” comments S. George, director, XLRI Jamshedpur.

The institute is also believed to have been quite agile in forging partnership with leading and innovative business entities in the recent past. For instance, it has signed an MoU with ArcelorMittal Nippon Steel to promote leadership excellence and innovation.

Similarly, its Delhi-NCR unit has entered into a strategic partnership with Automotive Test Systems (ATS) India to establish the Indian School for Design of Automobiles (INDEA), the country’s first school dedicated to automobile design and management. And, there is no dearth of such instances with other leading institutes which reflect their intent to add more to their portfolio on enhancing employability front.

Underlying factors 

Like any other sphere, India’s MBA universe also has a set of underlying factors or trends, which have strategic importance of their own – for instance, proliferation of IIMs in Tier II cities after 2000, with the addition of over a dozen units in locations like Shillong, Ranchi, Rohtak, Kashipur, Bodhgaya, Amritsar, Jammu, etc. But the moot point is: are they really contributing to the democratisation of management studies and resulting in gainful employments? 

“These new IIMs are sweet unicorns to the nation. Look at the number of professionals created by them. They are vital for making quality MBA education more accessible, creating a wider pool of trained management professionals and increasing the nations GDP and tax collections. These IIMs also play a key role in contributing to regional economic development by producing locally-focused business leaders,” Ram Kumar Kakani, professor & director, IIM Raipur, asserts.

But there are murmuring notes within the fraternity, suggesting that some of the regional units may not be worthy of brand IIM tag because of their poor deliverables and management. As an industry insider points out, strengthening these units should be taken up as an imperative. 

With the government reducing its financial aid to its funded institutes (including IIMs) in the past and now asking them to fend for themselves, the cost escalation in fee structure is visible all around. When IIMs increase their fee, it sets a chain reaction and others also follow suit.

As a result, the average fee structure in reputed institutes have crossed Rs20 lakh mark for the normal two-year courses. It used to be about Rs4 lakh about 20 years back, as an industry veteran points out. And, going ahead, this cost escalation momentum is unlikely to lose any steam.

“When schools move away from heavy subsidies, they have greater motivation to innovate and align their programs with market needs, creating a more dynamic and responsive education system. However, rising costs can make education less accessible, limiting it to a privileged few. To address this, it’s important to ensure education remains available to diverse economic backgrounds.  We can resolve this by expanding access to student loans and increasing merit-based scholarships,” comments Raman Ramachandran, director, K.J. Somaiya Institute of Management. 

The exponential rise (on a very low base, of course) of online courses in management studies (spearheaded by platforms like Coursera and also some reputed institutes in a collaborative mode) after Corona disruption had created the hope of possible emergence of an offsetting factor for general fee escalation. Industry estimates suggest online courses are available for one-fourth cost of offline courses.

However, they are mostly popular for short term courses among working professionals and they are far off from the point of emerging as a parallel channel for campus rooted system. “The emergence of online platforms for MBA studies has certainly gained momentum, but they are still a long way from becoming a robust parallel to traditional learning models. However, there are key differences in the approach. While online platforms serve as valuable enablers by disseminating knowledge, they are not in the business of creation – the hallmark of a true business school experience,” observes Chatterjee. 

Catering to the working professionals through short term executive courses or running corporate training programmes are now turning out to be a major attention for leading institutes including IIMs. It has opened a new avenue of earning for them and some of them have been quite agile in encashing this opportunity.

“About 40 per cent of our revenue is now coming from executive education,” says Rishikesha Krishnan of IIM Bangalore. In fact, too much action is visible in the executive education space where leading institutes seem to be aggressively making moves to harness the opportunity with their hybrid competencies. 

With placement blues becoming quite evident in the recent years, the role of alumni is once again in focus. Not only just to act as linking agents with the job market but rather in an all-round way where they can act more as mentors sharing their understanding and experience on the gap between classroom teachings and the real-world experience.

“Alumni engagement initiatives, such as mentorship programmes, guest lectures, and networking events, provide current students with invaluable opportunities to connect with experienced professionals. Alumni often contribute to the curriculum by sharing industry trends and insights, ensuring that the programmes remain relevant to the evolving business landscape,” comments Himanshu Rai of IIM Indore.

And as leading fraternity figures confirm, there is an equal emphasis on improving the research standards of the domestic institutions, a point where domestic institutes still have a lot of catching up to do.

But even as there are developments to suggest that leading institutes are making moves to make their identity of employability enhancer more prominent, the placement blues is unlikely to become a non-existent factor anytime soon. The somewhat subdued corporate performance in the second quarter has further fuelled this assumption.

“For the top 50 institutes, the main issue this year would be to ensure that the average salary figure shows some serious uptick. And the institutes in the 50-200 category, the challenge would be to get their students placed in the over Rs10 lakh salary category. Companies will mostly absorb candidates in the Rs6-9 lakh range and there is no clear picture of what would be their absorption appetite this time,” predicts the head of a leading institute.

But, for a medium to long term scenario, fraternity insiders have more serious prognosis to share.  “The demand for qualitative quotients is rising and that would entail making massive changes. More so on the approach and strategy front. I don’t think institutes down the order known more for their degree distribution competency in the marketplace will be able to survive for long,” says Chaturvedi.

Metri of IIM Nagpur, however, believes that on an overall basis, MBA recruitment would revive strongly given the projections of a robust growth in the national economy. “We took 60 years to reach $1 trillion GDP mark, seven years after that for $2 trillion, six years for $3 trillion and possibly three years to add another trillion or reach to $4 trillion mark. And now we are targeting to touch $5 trillion mark in 2027. The country is on a strong growth trajectory. The expanding businesses and technology upgradation need qualified professionals,” he states.

To aspirants, this may well serve a reason to somewhat feel elated even as Neelam Netra issues a serious cautionary note. “Right company, right talent, right package, right role all at the right time are fantasies of an ideal world, which do not exist. So, let’s be realistic and not ‘fake it to make it’.”