The Indian B-school

Is I begin writing about tam not sure how many business schools there are in India. Let’s leave out the undergraduate bit. For postgraduate programmes in 2015-16, we have some figures from AICTE -- 3,451 institutions, 55,434 faculty, 244,125 enrolment and 93,027 placement. However, there are management courses in university departments too and I don’t know if these figures capture those. Probably not. That degree versus diploma compartmentalisation is an unnecessary silo and won’t break down until the regulatory structure for higher education is reformed.

From the same source, in 2012-13, we had 6,003 institutions, 98,677 faculty, 411,331 enrolment and 135,503 placement. Several conclusions can be drawn. First, if there are that many business schools, there will be great heterogeneity. We don’t have to accept every global ranking as sacrosanct. However, if several global rankings show a pattern, that pattern is robust. The FT (Financial Times) Global MBA ranking of 2016 has Insead at the top. The first Indian one is Indian Institute of Management, Ahmedabad, at 24th, followed by Indian School of Business at 29th. Every Indian business school cannot become IIM or ISB, irrespective of whether it is public or private. Ipso facto, there is the grain and the chaff.

What does it take to create a business school that does well in cross-country comparisons too? This is a well-researched question and is a function not just of faculty and course structure, but also quality of intake. If entry is diluted, the end product will also be inferior.

Second, we have too many business schools and faculty and too high an enrolment figure. I am not suggesting that AICTE, or some other regulator, should have a quota on how many business schools there should be. The market and competition will take care of that. But competition requires entry, as well as exit. That drop in numbers, between 2012-13 and 2015-16, is probably partly due to a better regulatory structure and norms being imposed, but is also a byproduct of a shakeout.

Third, there is an issue about content of regulation, as opposing to licensing. In general, consumers of high education, students and parents, suffer from asymmetry of information. What are credentials of faculty? (B-schools are known to “borrow” paper faculty when reviews are done.) What does the institution spend its money on? Where does it raise its resources? What is the placement record? It is because there are holes in such information, that rankings of B-schools, undertaken by assorted magazines, are often imperfect. But the regulation is improving, with more and more information being asked for.

Fourth, look at the placement record of students, both in 2012-13 and 2015-16. With the economy slowing down, placements have been adversely affected. But independent of this trend, not more than 40 per cent of students are placed. Sure, not everyone wants to get placed, there is some voluntary opting out. However, that can’t be the complete story. Why do students join B-schools, often financing themselves and often in private institutions, where fees are higher? There are rare instances of a desire to improve vertical mobility within the existing organisation. More typically, the objective is to get a better job, ensure horizontal mobility, or perhaps even get a first job. The placement record shows this does not necessarily happen. Once upon a time, you needed to be a “graduate” to get a job. Caricaturing a bit, you now need an “MBA” to get a job. That MBA has become a filter for entering the job market. In addition, even for the 40 per cent of students who are placed, the quality of jobs obtained is typically far short of what was desired.

As in other segments of economy and society, we are in the midst of a churn, inevitably leading to disruption and uncertainty. It is no different for business schools.