MBA education in India

The other day there was an article on the group : World class fits for new India school

On going through this article and comments from various GMAT aspirants few questions popped up. After discussing these questions with few MBA professionals, this is what we concluded:

Ques 1: What is the overall thing missing in Indian MBA education system?

Ans: It is very difficult to pin point a single reason here. Few main aspects that can be pointed out are:
i) Faculty - Today, the faculties in MBA colleges are paid poorly (apart from say top 20 colleges) - Why would a good teacher like to teach at low salary in these institutes. Only the very passionate, or the biggest fool (pardon my language) would like to venture. The institutes make good amount of money - but the share going to the teachers is very less, and they do not have any skin in the game too.
How about something on the lines of ESOPs? Or Salaries linked to the placements? In that case, there will be some linkages to the remuneration earned by students - and possibly help in getting good teachers.
ii) We do not see any linkages between the industry and the institutes. The institutes go their own way and the industry goes its own. In fact, most of the MBA colleges do not have campus placements - even without campus placements there are enough/ many takers.
iii) Expectation Setting - In a country of poor people, if one gets to earn twice his father - he/ she feels that they have reached their goals. So, if I am earning say 5,000 per month prior to MBA, and after paying a fees of Rs 2 lacs, I get to earn say 30,000 per month - it provides an ROI of 150% - that is enough of an incentive (more so, if I am earning more than any one in my neighborhood). So, beyond a point, the students also do not try very hard to excel.

Well, one can go on and on... still we will not reach a point of conclusion. I see a good opportunity for someone to set up a management school with a difference.

Ques 2: Do we need foreign universities in India?

Ans: The foreign universities may make some impact on the management education in India. These universities will certainly charge higher fees and some of it will trickle to the teachers, and some, some more professionals may think of taking up teaching as a career. So, foreign universities may serve as a trigger - beyond that how much it will impact is a question. The demand for education is so high, that even if another 100 institutes come up - the existing ones can remain complacent as ever.
In the past there have been foreign institutes coming in different forms - how much they have succeeded is a question. Have you heard of Thunderbird? (They hold some semesters in India and some in Canada and they offer degrees from Canada). Similarly there is Manipal Ohio - in collaboration with the Manipal University. How much impact have they made to management education is an open question. Barring ISB - the foreign universities have made no real investments in facilities or the hard infrastructure. Most will offer course materials, case studies etc - the real investment is zero, as these investments are just incremental - but they will always put a value. So, many universities will like to partner with some entity here and would like to have a chunk of the brand.

Going beyond the discussion - Maybe the new Indian Universities be a reasonable bet to start with.

Ques 3: With high GDP growth why there are less employment opportunities? Is underemployment the factor here?

Ans: Firstly - There is something called "jobless" growth - when the productivity growth is more than the GDP growth. Thus, with the new enhanced machinery - we can produce three times more, whereas people needed are just another 50% more. An example maybe - implementation of IT systems - it does not necessarily lead to employment of extra people. Railways may be issuing 5 times more tickets - but today, thanks to Online Reservation, Automated Platform Ticket vending machines etc. the number of people manning the counters has not increased in that fashion.
Secondly, the cost of capital has come down in the last 10 years. Labor and capital are substitutable - so if cost of capital comes down, we employ more capital than labor. An example is - earlier, we required more people to lay roads - but today we substitute labor with productive machines.
Thirdly - In the last few years, the number of hours being put in by people has been steadily increasing. Thus, the companies do not necessarily hire to meet the shortages. Labor being inflexible resource to an extent - once hired it takes a while to remove it, even if the firm does not do well.

Underemployment is a big issue. Many people would not like to take up jobs in BPOs, but Retail is opening up. The MBAs - all they want to join the big companies - and there, you won’t get major opportunities to make much difference. The real opportunities for MBAs lie in the smaller firms that wish to grow and they need the managerial talent

Most of the MBAs in India are getting underemployed - today MBA is becoming like an entry ticket to a career like being a graduate say 15 years back. It is becoming a minimum entry criterion for jobs. In smaller colleges you will find that most of the students do get placed in banks, insurance firms - and they invariably start as Customer Service Executive! And we all know what the job involves.

Ques 4: Will the improvement in the quality of colleges help?

Ans: The quality of colleges will be of help - because, some firms which do not wish to go beyond certain colleges - may venture beyond the set. As of now, as the supply of good MBAs is limited, it dictates the price differentials between the leading and lagging institutions. Today, the lower rung MBAs have started joining the entry level jobs at ITES firms. They do not bring the skills to be deployed at leading firms.


Ques 5: Will more MBA colleges help in agriculture or in the other problems like education, health care that India is facing? Do we need Whartons and Harvards to churn out more CEO’s?

Ans: Actually, more number of colleges will certainly not be of much help - as long as we keep churning the same material - we do not really do any major value add over the basic graduation courses they have done. What we need is possibly a stress on entrepreneurship. Apart from the very top institutions (that too doubtful) very few take the road to entrepreneurship. We have to have the programs made in such a manner that much of the uncertainties of entrepreneurship has to be taken out - how many institutes ever help a student to make even a simple business plan. There is so much of Government support in the form of subsidies/grants/loans etc. - if the youngsters are trained to build upon that - we can solve a big problem. In the current context, the MBAs are only feeding the industry - and there is no incentive for the corporate to promote entrepreneurship - they want more employees.
If the MBA students, during the course of the program are made aware of opportunities in different domains - and how to go about it, I am sure we will make a difference. We spend so much time in preparing for some course requirement contributing to 1% marks - but do not invest in some thing having more impact as a business plan.

Secondly, there is a do we need more Harvards and Whartons to create more CEO’s. What we need is more enterprises - CEOs will follow.

An interesting development in this area - Art of Living is launching mini MBA of 3 month duration. For small ventures - with medium complexity, one does not need a 2 year education. So, one can conceive of a management education of 3 months, focused on entrepreneurship and duration of 3 months - to be run with military discipline! Some of the essence of good management begins with getting up early and managing your day well - and rest will fall in place!