We estimate that 6-8% of the students from across all the top business schools in India which are featured on this website will be left unplaced or will sign out of the placement process. The cut-off time we look at is the convocation ceremony season that begins this week and goes on till the 2nd/3rd week of April. We have arrived at this figure based on actual data from the ground. At least 4 Old IIMs had double-digit number of students still to be placed as on March 10, 2013 (PGP/PGDM). There is a top business school in South India with three-digit number of students still to be placed as on March 5, 2013. These are facts. Our estimate is based on actuals.
Why the hype surrounding this issue?
Just to build perspective, we ran through some numbers of business schools abroad. The good aspect here is that such numbers are available and there is little doubt about their accuracy.
Anyone from a business school in Europe, USA or even places like Singapore and Hong Kong would laugh at the hype. If only 6-8% of the graduates were without a job on graduation in the UK or the USA today they would be quite cheerful.
Indian business schools were blessed with a big demand-supply gap for high quality skilled labour for almost a decade. During the period from 2000 to 2008 when India grew, demand always outstripped supply and arrogant MBAs from India's top business schools would 'reject' companies and show off their 'multiple' offers. With the 'India Story' there was also an 'MBA Story' that was fast catching middle-class India's imagination. A combination of demographics and the fascination with this story resulted in a threefold increase (from the year 2000) in the number of applicants for the CAT which reached its peak in 2008.
No IIM had more than 300 students graduating from its campus in 2008. Even ISB had less than 450 students graduating from its campus. XLRI, FMS, SPJIMR had a batch size of less than 200 students. Only 22% of the seats were reserved in the IIMs. Placements were always 100% or thereabouts. It was unimaginable to think of students unplaced even one month after the convocation ceremony. In 2006, the UPA government introduced reservations for OBCs. A fight ensued in the courts and it was decided to maintain the number of general category seats and increase the batch sizes in a phased manner from 2009 onwards. The UPA government also decided to increase the number of IIMs. In its two terms, the number of IIMs has gone up by more than 100%, from 6 to 13.
Things have never been the same since the Lehman crash of September 2008. With the exception of 2011, most of the years can be classified as tough. However, 2013 is different. There are a LOT of people without jobs and they are people with student debt of over Rs. 1 Million (at least in the top schools). An average EMI can be anything between Rs. 22,000 to Rs. 29,000. This also makes life very tough for the bottom 25% who have jobs. A lot of them will not make more than Rs. 65,000 a month. EMI + Rent will eat a lion's share of income. If one is married and the spouse is dependent, then the world can seem very cruel.
Is it the fault of the business school that students are still without jobs?
Our view is that business schools are not meant to ensure that everyone has a job. It is their responsibility to ensure that they provide the best education and environment to make their students job worthy. The focus of the business school should be on maintaining the quality of academic interactions in the classroom, ensuring adequate exposure to real world problems, engaging with the corporate world and doing high quality research. All this, apart from ensuring that there is an environment for diverse minds to interact with each other in order to learn as much as possible through these interactions.
Are top business schools doing their job well?
This statement is based on anecdotal evidence and we have no survey or empirical evidence to show for it. But you are unlikely to find a student who goes to a top business school in India for the 'quality of faculty' or for the 'academic excellence' of the place. Every school has a handful of really good professors and the rest just make up the numbers. A lot of them are PhDs from universities that have no standing. A couple of really old schools have a better ratio. Some private business schools have a better ratio because they can afford to pay better or offer the job in a bigger city which opens up other opportunities. (There are other considerations like opportunities for the spouse and good schooling for the kids.) There is a massive quality faculty crunch across India.
There is a big question mark on the quality of research but it is a contentious issue which we shall stay away from for now. It may be a topic for another story.
The overall standards are quite low in a lot of places and students don't really demand much quality either. Most of them are interested in the first salary figure on graduation which they can show off and as long as a business school provides that they aren't really interested. There are enough cases of rebellion against good professors, who make students work hard so that they can learn better. Business schools were also happy with this arrangement as they didn't have to push themselves. Students got great jobs even if the quality of learning was dismal. With more and more business school graduates and no commensurate quality job opportunities, this scenario is changing. Business schools imparting poor quality training will fall away.
Also, students need to take the maximum blame for not demanding quality. Hopefully, there is a bunch of students out there who can go question the Dean/Director of their school, "What are we paying Rs. 1 Million for? Give us quality." But the general attitude towards MBA is very transactional in nature. Work hard to get in. Ensure that one gets a great summer internship. Work hard enough to get a Pre-Placement Offer. Sleepwalk through MBA.
And we are talking about top business schools here. There will always be exceptions but we don't think we will be very cruel to generalize here.
The problem of transparency
No one is willing to speak on record about the placement scene because most top business schools have a strange animosity towards honesty and transparency in India. As we type this, efforts will be on to creatively present placement reports. There will be some schools that will lie outright in their reports. A few will window dress and conceal the vital. It is this attitude that emboldens second and third rung business schools to be even more blatant in their misrepresentations. When the best do it, why should we be sages?
Why can't schools be forthright and declare these statistics cleanly? You can't expect anyone to take your courses on morality, ethics and social responsibility when the school itself indulges in misrepresentations. And you can actually pick out names of schools that do NOT misrepresent or conceal. We had a classic case last year of a business school from South India where the placement chair wrote to us honestly about the number of students unplaced even in the first week of April although the placement committee and the school's PR machine had gone to the press celebrating completion. The placement committee then wrote to us saying the professor is wrong and is ill-informed about the number of people placed. The question is, why lie? Why mislead students who want to join your business school? Aren't they your customers in some sense? If I’m investing 2 years of my life in an educational institution and also investing over Rs. 1 Million, it is my right to know the true picture. And every student in the placement committee who helps, endorses or indulges in misrepresenting facts is guilty of misleading thousands of students. Not revealing the facts is a crime too.
There is also game theory involved here. Everyone is calculating the price of telling the truth. In a world full of liars, being honest can be counter-productive. So everyone needs to ensure that they don't 'appear' worse.
IIM A's IPRS is the step in the right direction. It is by no means a comprehensive audit according to us. But it at least sets the standard as far as reporting the salary figures go. It also exposes the false claims made by many other top business schools.
Is the placement committee responsible for poor placements in a particular year?
Placement committees get undue credit when placements are exceptional and they get undue flak when it is a tough year. Alumni and the market realities determine the overall placement scenario of a business school. We are not discounting the role they play. They make great efforts in presenting the best face of the business school and at times goof up enough to show the worst. The larger point is that a business school that is 5 years old cannot match the placements of a school that is 50 years old even if you have the most talented people in the placement committee. The alumni bases, the brand name of the business school, the reputation of its faculty all play a far bigger role. The work of successive placement committees needs to be seen over a 5 - 7 year period. The impact of their efforts is truly available over a longer period of time.
Also, placement committees cannot ensure jobs for people who do not deserve them. But students who are part of placement committees need to do some soul searching. Are they happy being part of a team that releases a report that misleads people outside? Their actions can indirectly lead to a lot of people making poor career choices and being very unhappy.
To read about issues with placement committees, click here
What is the recruiter's view?
"We went to 3 top business schools this year. We recruited just 1 person. The overall quality of the talent pool available to us was poor. Students lacked basic communication skills and did not know their 1st year subjects properly. All these 3 schools are in the top 10 schools in the country. It seems the best lot was placed by the time we went. The schools also refused to divulge the candidate's CAT percentile. I don't think we are going to these schools again." These are the words of a recruiter based in Mumbai.
However, there are many who were satisfied. "We were happy with our experience recruiting in all the schools. We enjoy great brand equity among students and the IIMs present the best minds in the country. We are among the first few companies on most campuses each year and generally do not have to worry about poor quality being presented to us", says another recruiter based in Mumbai.
We spoke to an MNC bank based in Mumbai which said that they had decided to not recruit for final placements at all. The company had changed its strategy to only look at candidates during summers and award PPOs. "The success of the IIMs hinges on the fact that the best join them. We prefer catching them as soon as they join. Our experience during final placements has not been as good. We filled all our requirements by giving PPOs. This year has been particularly bad. We didn't have numbers. But we may still visit a couple of campuses because of pressure from a few MDs who want to recruit from their alma mater", says the HR representative.
Different recruiters have different takes. One thing is clear though. Companies know about quality issues due to the increased batch sizes. It takes recruiters some time to warm up to ground realities but it is naive to assume that they do not know what is happening to the talent pool. Alumni play a big role and will help but they are answerable to their organization too. One of the things that irritates alumni is when placement committees lie to them as well. (Placement committees claim that a lot of alumni try to take undue advantage of their position and try to disrupt the placement process to benefit their own companies.)
The larger point is that just because more people graduate and just because the IIMs have loyal alumni bases, there is no guarantee people will get quality jobs. Recruiters are not going to line up when they know people have entered the school with highly substandard credentials. Standards should be relaxed for disadvantaged sections of the society. But there needs to be an acceptable standard. Business schools believe that recruiters are not fully aware of this phenomenon. They make CAT percentiles and at times even the academic grades hidden to ensure everyone gets placed. But you can only go so far.
We haven't spoken to PSUs but they are done being used by the top schools in India. Read this piece here and then read this piece here. Even the PSUs know they have been taken for a ride year after year. But then, it is tax payer money that will be used so it is okay to 'help' the IIMs.
(Must Use : The InsideIIM Career Guide)
Our view and the way forward
There is no shame in not being able to place everyone. Eventually, the responsibility lies with the individual. No one 'deserves' to be helped by the institution to get a top quality job . The institution should work hard to create the best possible environment in order for that to happen.
The narrative needs to shift away from placements to the quality of academic work, research, peer learning, infrastructure, global exposure etc. The obsession with 100% placement should and will end soon. Even within placements, the narrative needs to shift from average salary to exact roles and profiles and diversity of opportunities. Placements will always be important but the mindset to judge everything with placements is leading to more dangerous things.
Business schools need to be transparent and should make a clean presentation on the state of career opportunities. We believe that aspirants and recruiters are likely to gravitate towards schools that adopt a transparent approach. If 5 out of the 10 top schools move towards presenting the true picture, the other 5 will be exposed and they will lose their standing. It will also expose multiple schools in the lower rung that have been literally cheating people and manufacturing lies. Unfortunately, it is not the case today.
Recruiters are already wiser and are moving towards alternative options. They are expanding the breadth of schools they want to recruit from and are also looking at online hiring options like LinkedIn. A lot of them have realized that they do not even need MBAs. It is also an opportunity for schools in the lower rung and professional bodies like ICAI and CFA to exploit issues with the top business schools and enhance their pool of companies. It is an opportunity for entrepreneurs to create alternative models that will help fix the system. It could range from fixing the academic quality to fixing the career-related services delivery. Business schools with smaller batch sizes should vehemently promote this very aspect. They could talk about the better quality of interactions, academic focus and relative ease in facilitating placements for a smaller group.
A student wishing to pursue management education in India needs to know that an admit is no guarantee for success and definitely no guarantee for happiness. Please know that it is a expensive decision to do a MBA even in India. One should make an informed choice. As cliched as it may sound, please know why you are doing a MBA. Try to research in detail about the pedagogy, faculty, student activities and other networking opportunities that a business school offers you apart from placements. If you are good enough you will get a job even if your business school cannot help you.
But ensure your business school is delivering on the basic premise of its existence - Education. And make sure that you are committed to make the best use of the two years (and we are not talking about grades!)
If you ensure this, getting a job will never be an issue at any point of time in your life.
By the time we finished creating this story, it is was difficult to not realize the insignificance of the situation. While we focus on a small placement hiccup at the top schools, we fail to realize the crisis facing the country where thousands of students with an undergraduate degree are without jobs year after year. How can we help them?
- Created by Ankit Doshi. Edited by Pallavi Kamath.
Know everything about Placements in Top Schools in India here
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