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Challenging Times For Management Institutes, Aspirants

Time is ripe for bold innovations in management education; it is now become imperative for business schools and management aspirants to practice some of their own management lessons for their own survival and growth!

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The government initiative in establishing twenty IIM’s in the country with IIM  Jammu in 2016  has been a significant milestone in the evolution of management education in the country. Approximately 4000 seats in two years full-time program are available  to manaIntensifying competition in Management Education:

Challenging Times for Management Institutes and Aspirants
The government initiative in establishing twenty IIM’s in the country with IIM  Jammu in 2016  has been a significant milestone in the evolution of management education in the country.  Approximately 4000 seats in two years full-time program are available to management aspirants in the country in IIM’s alone. Considering the fact seventh IIM in Shillong was established in 2007 and that there were less than thousand seats in all six IIM’s combined in 2004, the increase in the supply of management graduates is unprecedented. If we consider the two thousand more seats in the other 10-15 top ranking management institutes the seats available comes to 6000 in the top thirty around institutes.

The increase in management seats has intensified the competition for corporate jobs and careers. The average domestic annual starting salary in the top six IIM’s in 2007 ranged from approx Rs  7-10 lakhs)  while in 2017 this ranged from 14-20 lakhs ( source -online reports); this comes to only 6-7%  annual increase in salaries.  One reason for the slow growth in salaries could be the three-fold increase in management seats. Another reason could be the growth of executive education in the country which has also helped firms meet their requirements. The executive education with one year or more duration is now been offered by the top ranking management institutes and is able to attract more than 1000 participants; conservative estimates.

The high expectation of starting salary by the fulltime management graduates is linked to the increase in fees for the two year MBA program. The program fees in IIM A which was Rs 4.3 lakh in 2007  is now at Rs 22 lakh.  While the average domestic salary was well above the program fees in 2007  they are around the same level only in the top ten institutes which gets a better placement at this time. The fees in the established top twenty institutes vary between Rs15-22 lakh. A frank discussion with an MBA student is reproduced below - " Unless we get Rs. 75,000/- monthly take-home salary we will not be able to survive in a metro. We need to pay Rs 20-25,000 rent for a one-room paying guest accommodation in a good locality/address in Mumbai - Delhi etc; Rs 20-25,000 for monthly food/ transport  expenses including outside dining and other expenses and  Rs 25,000 and more  towards five years 15 lakh student loan EMI."  As the median salary is more than fifteen lakhs only in the top ten institutes even for the students in the top ten management institutes the salaries have become much less attractive compared to their net earnings a decade before. Majority of the students have to now take an educational loan as many of them who were pursuing engineering has already spent ten lakhs and more in their four year graduation period.

With the wide difference in starting salaries of an MBA from a top business school and other graduates as well as working executives without an MBA but in a similar role as the new MBA recruit, the pressure of performance on the MBA  has been on the rise in the organisations. Given the pressures to reduce costs, many firms have replaced certain jobs done by MBA’s earlier with graduate students from better institutes at a lower salary.  Increasingly MBA graduates were looked upon to bring innovative solutions to solving organisation’s problems than doing operations tasks.  An exploratory study with IIM / other top management institutes revealed that majority of the MBA students are not able to cope with these industry realities/ pressures. A consequence of this is that as many as 60%- 70%  of the   MBA graduates are not able to hold to their campus placements for more than three years. This figure may vary for different institutes; however, there is a need to track the performance of the MBA graduates in the industry to get valuable feedback to make necessary corrections in the selection process as well as the design/ delivery of the academic program.

If this is the situation in the top 30 business schools, one could guess the situation in more than three thousand management institutes offering 1.5 lakh MBA seats with limited academic infrastructure and resources in the country.  The news is that more than 100 B-schools are shutting down this year as they are not finding the going easy.  Time is ripe for bold innovations in management education; it is now become imperative for business schools and management aspirants to practice some of their own management lessons for their own survival and growth!

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


Joffi Thomas

The author is a faculty at IIM Kozhikode

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