Nowadays, in the "boom period India", the concept of education being sacrosanct and thus averse to profiteering seems to have gone down the drain. This is particularly being brought out through B-Schools today, or is it?
Over the last five or six years, Indian B-Schools have concentrated on expansion - building new campuses in different cities. Every B-School from IMT Ghaziabad to IMI Delhi to XIM Bhubaneshwar has followed this trend. Even the IIMs have been unable to resist creating another 4 IIMs (and some more to follow).
Another trend has been to increase the batch size time and again. One explanation for this is the administration wants to bring in more money to fund its expansion plans.
The third trend is increasing fees. The peculiar thing is that while the market leaders - the IIMs - had low fees, so did the other colleges. When the IIMs increased their fees, so did the others! The fees for a two year PGDM/PGPM degree today, in many of the top 20 B-Schools, range from 9 L to 12 L for the course.
Let me link all this together. What is the motive behind increasing fees time and again? B-Schools do not need to invest in technology and hospital beds like medical colleges do. They do not need any infrastructure of a very specialized nature that would be costly to purchase. Why do these B-Schools create new campuses? Leave aside the IIMs - they believe that more IIMs in small towns will help students get access to high quality education and get the IIM brand. The IIMs have resources, negotiating power and facilities like no other B-School in India. And yet, IIM-A said recently that with a batch of 400 students now, they would need a rolling placement process. What is the need of a 400 strong batch?
IMT Ghaziabad raises its fees every other year and its batch size with the same frequency. The former has crossed 11 L now for the regular PGDM and the batch size is 420 + 120 students of a Dual Campus Programme. They started off IMT Nagpur in 2004, IMT Dubai in 2006 and now IMT Hyderabad will start operations in 2011. Needless to say the younger cousins of IMT Ghaziabad haven't developed good brands yet and have huge batch sizes and high fees.
MDI had excellent placements till they raised their batch size to 330. Since 2009 they haven't been very open about their placements. The fees are close to Rs 11 L as well.
IMI Delhi fees are 11 L and they don't have great brand visibility yet. IMI Bhubaneshwar is starting in 2011.
XIM Bhubaneshwar was on the rise as a brand but has now decided to open two new campuses soon.
SIBM Pune has fees of 10 L + and the placement details are said to lack transparency. They started SIBM Bangalore a few years ago. SIBM-B hasn't yet been able to establish itself well.
NMIMS Mumbai has started NMIMS Bangalore, which by many accounts is not a great college at all.
There are more examples, but these are enough. What is the purpose of this uninhibited expansionism?
Is education a way to earn quick and humongous profits?
Is education a business where expanding and diversifying are the buzzwords?
Does India have 6745361 good faculty who can do justice to MBA education?
Is there really a demand for so many MBAs? Add IIMs (some 2000 + seats), XLRI (240 seats), FMS (60), MDI (330), IIFT (120), SP Jain (180*), JBIMS (180), and you cross 3000. These are just the cream colleges. Add on an average another 300 seats in 10 more colleges below, and you get a total of over 6000 seats. And mind you we are talking of the top 20 colleges in India and about just one campus of all of them except the IIMs.
India has about 2000 B-Schools with say about 120 seats in each one on average. So it means that each year India produces at least 240000 MBAs! Where do all of them go?
Nowhere. There are about 40 good Business Schools in India producing about 10000 MBAs a year in total. All of them do not get good placements.
Nor do all of these 40 good B-Schools have great faculty. Many of the 40 have expansion plans (or have already expanded). Very few of the sister campuses are doing well. In fact, none comes to mind!
Is the demand for MBAs in India in excess of the supply? No, the case seems to be quite the opposite. The aftershocks of the 2008-9 recession are still being felt. A lot of MBA colleges are yet to recover from the shock in terms of placements. Is the MBA bubble about to burst? Looking at the speed of the expansionism policy of B-schools, the answer is a resounding yes. There are many articles on the internet regarding this too. Take a search and have a look.
In this scenario money making seems the only reason for such wanton expansion, especially in the case of private B-Schools. There is no other explicable reason, given that faculty crunches and infrastructural problems have already begun to set in at some B-Schools.
Loan repayment has become a major factor for a student. Increases in batch size, simultaneously with increases in fees has already begun to hit placements at leading B-Schools. The ones who remain at the fag end of the placement season suffer. They get pathetic profiles (or no placement at all), low salaries and what follows is obviously a long struggle to repay the loan and live a decent life.
This scenario also encourages the "monetary ROI" mentality I wrote about in my previous post, since an MBA is not much good if you can't live decently for ten years after.
The bubble is surely growing larger and will burst in a few years. The combination of increasing cost of education, lower quality faculty and infrastructure, reducing batch quality and the excess of supply over demand - leading to lowering market price for an MBA graduate - will ultimately lead to the demise of the MBA phenomenon. One can only hope that the demise leads on to another demise - that of the "good money, good house, good wife, good life phenomenon" so prevalent in Indian middle class society.
