beyondbrics

With economic uncertainty growing at home and abroad, more and more Indian students are passing on MBAs and instead going straight into stable jobs with big-ticket IT companies like Facebook, Google and Microsoft.

Mid-career executives, similarly, are staying away from higher studies, fearful of leaving a well-paid job to invest two years of time and money with no guarantee that a high-paying job will materialize on the other side.

The Economic Times reported that the number of enrolments in various Indian business-school placement tests had decreased marginally this year, while enrollments at business schools below the top level had declined by as much as 50 per cent.

“While the impact has been relatively low in the top institutes, a majority of the 4,000-odd management institutes in India are facing an acute shortage of students, even a 50 per cent drop in some cases,” Shekhar Chaudhuri, director of the Indian Institute of Management-Calcutta told the Economic Times.

That makes sense, says Ashwin Assomull, partner at The Parthenon Group, a Boston-based consulting firm whose Indian office focuses primarily on education. The reason: students tend to view further studies as an investment whose return is measured in terms of salary hikes.

“The fact is that students are extremely rational and they look at an MBA as an investment. Clearly if they do not feel that there will be a payback in terms of higher earnings, they won’t do it,” he told beyondbrics. “If they’re coming out of [one of the prestigious Indian Institutes of Technology] and Facebook is giving this really nice package, and if they can go get an MBA and get [just] 5 to 10 per cent more, it’s unlikely they would go for that.”

At lower tier schools – which the vast majority of students attend – the prospect of a significant pay bump is even lower, deterring students further and causing those schools to look toward lowering admissions standards.

Jaya Joshi, spokesperson for IIT-Bombay (Mumbai), one of India’s highest-rated schools, said the low difference in pay was also why many of her students decided against MBA courses even in years when the economy was strong.

“Most of these top IT companies hire these students at par to those they hire from IIMs, or at just one level junior to those from IIM, because those at IIM have already put in two years for their masters,” she said. “So because it’s done with that clarity from the beginning [IIT students] really don’t see much sense in spending that additional money and time on that.”

On Thursday and Friday, IIT-B – the only Indian institution to rank on the Times Higher Education list of the world’s 400 best schools – along with other universities across the country hosted recruiters from foreign IT giants like Facebook, Google and Microsoft, consulting firms and global banks.

Salary offers, Joshi told beyondbrics, were up 10 to 20 per cent this year compared to last year, while the number of interview slots had more than doubled.

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India file, beyondbrics