The Future of the CAT (Common Admission Test)

The waning interest in CAT among MBA aspirants continued as this year saw around 1.85Lstudents appearing for CAT 2011, no significant change (Ref. graph) from CAT 2010. Put this in perspective, that the number also includes the JMET applicants who would have applied for the IIT-SOMs and doesn’t take much to figure out that all is not well with the CAT. Looking at this trend I can’t help but think about the future of CAT.

CAT has lost its clawsLike it or not! With the new format and the blunders of CAT 2009, all has been ensured that CAT loses its edginess and is no longer one of the most ‘feared’ examinations around. The hype did contribute to no. of applications. But the age of hype is over. Vendors have messed up and been shuffled around. The online CAT is still evolving and nowhere close to the GMAT pattern that it so miserably tries to emulate. It is no longer a pencil-paper test and draws only crowds from metros (close to 70%) with reports suggesting that an online CAT repels students from smaller towns and villages.

Adding to the misery is the fact that acing the CAT doesn’t guarantee you squat. You could make headlines for being a 100 percentile-guy, but pray to God that you don’t make another headline that says, “Now, IIMs don’t even want their100-percentile guys”. Students will slowly understand this complication and steer away from CAT if such a trend continues. In such an event, I won’t be surprised when there comes a day when there aren’t even 1 lakh students to write the CAT.

Outcome – CAT fever eradicated from India after polio & small-pox!

Recessionary TimesThere were opinions that doing an MBA would be a smart idea in the time of recession (principle of structural unemployment) especially because of the high returns that MBA was traditionally known for. However, students have realized over the past few years that MBA doesn’t guarantee a fat pay check. On the other hand the recession has shown no remorse. Industry sentiments don’t take a lot of time to percolate into the psyche of students. They feel that leaving their current job for an MBA is going to be less rewarding and more perilous than thought initially. I opine that this dip is going to continue till it reaches a no. of 1 to 1.25L mark with thrice the number of seats.

Outcome – Placement committees introducing a statistic used by foreign B-schools, ‘% of students placed after 6 months of program completion’ in placement reports.

To strengthen the argument above you may want to read this article by another author on this website : Final Placements – Class of 2012 : The big test for the IIMs

Brand DilutionIf Harvard Business School were to write a case on Brand Dilution, they should probably pick up the IIM expansion as an example. IIMs are springing up like private colleges all across the country. The brand dilution has come to a point where alums are forced to swallow the harsh-reality that IIMs don’t generate those awes that we were so familiar with. The ratio of an applicant to student was 150:1 which has gone down to approx. 57:1 with 13 IIMs in operation. Hence, it has to be seen where brand-IIM goes from here on.

Outcome –CAT-failing whiners snorting at sheepish IIM alums and asking, “Oh, you must be from IIM-Q!”)

Year

No. of applicants

No. of test-takers

No. of seats

Conversion ratio

CAT 2005

170000

155000

1200

129.2

CAT 2006

191000

180000

1400

128.6

CAT 2007

250000

230000

1500

153.3

CAT 2008

290000

276000

1760

156.8

CAT 2009

242000

230000

2260

101.7

CAT 2010

204000

185000

2650

69.8

CAT 2011

205000

186000

3250

57.2


Statistics on the CAT conversion ratio (Source: Internet/News Media)
* – when the OBC quota implementation was done
(InsideIIM Editor view : While it is a very useful statistic, readers must note that the conversion ratio for General category candidates has not changed too much)

Tuition FeesTuition fee hikes have become a norm among B-schools to such an extent that when IIM Kozhikode introduced a marginal fee-cut (for which the institute did take quite a hit on revenues) they became hot news. While you cannot blame business schools, for charging a fortune to maintain quality of infrastructure and the faculty, this entails that the famed ROI of IIMs has gone for a toss with diminished pay-packages compared to pre-2009 times. Paying interest-rates of 11+ % on loans in excess of 10 L is no joke and ROI seekers will no longer find sense in doing an MBA over a short-term. The gains are only going to be in medium and long-term especially those who have pre-MBA work-experience.

Outcome – IIM Grads with a standard of living (sharing an apartment with 5 other guys) that is just the same when they earned one-fourth of their current salary.

 

Transparency in ReportingAs an ex-Media cell member I see a stark difference in the kind of reporting done for B-schools now. A few years back you could hear the phrase ‘1-crore package’ used way too frequently with IIMs. However more transparency shown by all IIMs has ensured that institutes are no longer fighting to be the first to print a bunch of framed half-truths in leading dailies. Institutes such as IIMA have taken an extra step to audit their reports externally to ensure transparency in front of all their stakeholders. This gives a truer picture to students aspiring to earn big bucks post their MBA. Right set of expectations only gets the right students into these institutes.

Outcome – An article on how Gandhian principles are being followed in various walks of life in B-schools to be released soon by an IIM near you!

Work-ex WoesWork-experience – considered a boon for folks entering a B-school turns more of a bane. Ironically it is this ‘veteran’ segment of the CAT-takers which gives its heart and soul into clearing the CAT.  Most of the marketing giants and conglomerates have instituted leadership programs for which they prefer with people with lesser work-experience with freshers being hired in a majority.  However, changing careers never really works out for a majority of experienced folks as they are not open to taking a pay-cut

Outcome – All the veterans CAT takers taking ‘VRS’ from their weekend-job of taking up mock-CAT

Diversity DoldrumsIt is sad that our imagination of classroom diversity is limited to ‘gender-diversity’.  While it was initially thought of as an experiment that IIMs conduct every year, I think the trend to have 30% females is being seriously mulled by so many IIMs and implemented by quite a few. And with no. of people with work-experience set to reduce in the current environment, IIMs could very well be an extended under-grad stint for most folks.

Outcome – Marginal benefit of having females on Campus tending to zero

Final Word: The lion just becomes a puss… CAT will never be the same again!

With all the reasons discussed about, following are the implications that I foresee:

  • A group of serious, MBA-focused but inexperienced graduates taking CAT. While this doesn’t fit the typical international applicant, but then it happens only in India right?
  • People with more experience will find sense in doing an MBA from institutes such as ISB and other foreign universities that accept GMAT. But there a separate set of challenges that GMAT candidates face (not in our scope)
  • Applications for full-time higher management studies may see a drop and executive programs, part-time MBAs/specialized MBA programs in financial engineering, accounting, enterprise software management will see a rise going forward

While this may be the demise of the legendary CAT, it could be good in the larger interest of the existing management talent pool. At the end of the day, what an MBA does post B-school isn’t rocket-science but he is paid more for his ability to successfully shoulder more responsibilities and take the stick for it. Therefore, the more isn’t really merrier!

– Charan Iyengar

Sources:

(The author is an alumnus of IIM Kozhikode – Class of 2011 and has worked as a Technology analyst at HSBC and JPMorgan in the past. He is a Senior Consultant with Wipro Consulting Services)

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You may want to read other articles by this author –

Summers Prep -Will the real Consultant please stand up?

Summer Placements at Business Schools in India – Time for a Rethink?

Libraries at IIMs

Mind over matter while stepping into a B-School

Also Read : CAT 2011 – Didn’t Make it?

 

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Charan Iyengar

The writer is an alumnus of IIM Kozhikode - Class of 2011 and has worked as a Technology analyst at HSBC and JPMorgan in the past. He would be a consultant with Wipro Consulting Services

Comments

10 comments

@sassyboy

one more thing that I would like to add to your theories is that the number of students eligible for taking CAT should be going up year after year. Back in 2002 when AIEEE was first conducted, about 2.4 lac students appeared for it. Most of these would have written the CAT in 2005/06 and onwards. The number of students appearing for AIEEE has been increasing over the years with the figure at nearly 4 lac in 2005 and nearly 8 lac in 2008. So i would have expected all the increasing number of students to appear for CAT or other MBA exams but that surely does not seem to be the case. Given that, the decline in number of CAT takers is perhaps a more sorry state of affairs.

Hari

Why is "awe of CAT" being used as a proxy for attractiveness and usefulness of an MBA 😐 And in general CAT used as a proxy for MBA..almost! Just why is it so important for CAT as an exam to be very tough and awe inspiring!?

Charan

@Hari, the awe of CAT (and i am not putting it in inverted commas) only reflected how much IIMs were in demand. With the no. of applicants going down, it surely tells you how attractive MBA from IIMs and many other allied institutes are considered now when compared to a few years ago. And that is what is precisely been mulled over here. If the exam were easy, anyone would get through, the quality won't be there, and so on. It is an integral part of the identity of IIM.

Diverse

Can the authorities not see the undemocratic nature of computer based CAT? Will it need a supreme court PIL to restore them to senses? Let's face it – guys from smaller towns can't take it as comfortably as metro students do (statistics prove that)… but no one seems to be bothered. And they talk of diversity!

B schooler

Well, to conclude that less applicants in CAT, would result in brand dilution may not be fully correct. With the new CBT format and UG salaries at good commerce and Engg. schools increasing, CAT may be filled by more serious applicants only thereby increasing competition within the 1.85 lakh applicants. If we analyse deeply the number of Applicants in CAT was highest in 2008 Dec CAT when the B school placements were at a all time high, so many non serious applicants also filled up the forms to create a set of say, dummy candidates who would only end up increasing the percentile of serious one's.
Personally, I think that the Quality of IIMs is decreasing because of the reservation fiasco.

Charan

@b-schooler, while I agree with your points of lesser applicants could also mean more serious applicants, my intent is to point out that creating newer IIMs without any discretion and regard to quality are resulting in a brand dilution, not the applicants. Applicants are primarily hypothesized to have reduced as an outcome of brand dilution. Hope you get the point…

Somaditya

You are mistaken about the number of candidates who actually appeared for CAT in 2010 and 2011 as opposed to the number of registrations.

In CAT 2010, no. of registration was around 2.04 lakh and out of those around 1.86 lakh.

While in CAT 2011, no. of registration was around 2.06 lakh (more than last year) and out of those around 1.85 lakh appeared.

What you have done is compared the no. of registrations in CAT 2010 (2.04 lakh) with the no. of candidates showing up in CAT 2011 (1.85 lakh) and calling it a "significant drop".

The numbers have actually stabilized at around 2 lakh registrations and 1.85 appearances.

charankvi

Somaditya…you are right there…we will amend that point..thanks for the same 🙂

pravin

Also Post MBA no companies would ask wht is ur CAT score but what value add or work experience u have.So going foward i agree with author executive MBA will be the NORM