Thursday, 25 July 2013

Why doing MBA from Indian B Schools makes sense?


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Until recently, the two-year PGP course, the flagship program at all IIMs, has been the gold standard of MBA programs in India.  But calling them MBAs is actually a misnomer.  

One problem is that IIMs award diplomas rather than degrees.  But the real impediment is the fact that international accreditation organizations such as the Association of MBAs (AMBA) require a program’s students to have an average of at least five years work experience and a minimum of three years.

PGP courses do not meet this criterion.  They often admit students with no fulltime work experience and the average is around two years.

Officially, accreditation organizations consider PGPs to be an MBM – Masters in Business and Management.  Unofficially, the PGPs usually characterize themselves as “MBA-equivalent”.

From the founding of the first IIMs in Calcutta and Ahmedabad in 1961 followed by IIM Bangalore in 1973 (there are now a total of 13), this was the model that the brightest students in India aspired to.

 But this comfortable status quo was challenged with the creation of ISB, the Indian School of Business, in Hyderabad in 2001.  Its flagship program is of one year duration and it requires more work experience for admission – the minimum is normally two years and the class average is about five years.

It turned out that there was a strong demand for ISB’s approach and their class size has grown to more than 700 per year.   As you might expect, it wasn’t long before several of the IIMs followed suit and established their own one year programs – first the PGPX at IIMA in 2007 and soon after the EPGP at IIMB and similar programs at IIMs in Calcutta, Indore and Lucknow.

Internationally, most of the MBAs outside North America are one year programs.
Top-tier European schools like INSEAD in France, IMD in Switzerland and IE in Spain are well-established and highly-selective.

Average work experience varies from about five to seven years.   In the US, most MBA programs still use the two-year model but this has started to change – three of the top twenty American B-schools now also offer one year full-time programs alongside their existing two-year programs.

MBA in India and abroad

Each program has its own particularities, so direct comparisons between programs in India and those abroad are difficult but it is possible to make a few generalizations.

Students in Indian one-year programs, generally, have more work experience, up to 9.5 years in IIMB’s EPGP and 10+ years at IIMA’s PGPX.

Average GMAT scores for students in Indian one-year programs are competitive with that of programs abroad.

The percentage of students with engineering background is more than twice high in Indian programs (For example, 28% at INSEAD and 37% at Stanford versus 74% at ISB and 68% at PGPX).

While the fees for Indian one-year programs represent a hefty investment, up to Rs 24 Lakhs, the cost of foreign one-year programs is more than double and can be close to three times as much.

Most European and American MBA programs have a large percentage of international students, with 40+ nationalities often being represented in a class.  Indian programs, on the other hand, have a negligible representation of international students.

For example, ISB had only 13 out of a class of 700+, PGPX had just six with foreign passports, and most other programs had none.

Indian programs do attract a significant number of NRIs, especially in the one-year programs. These include people who intend to re-settle in India after graduating as well as those intending to continue working abroad but wanting to take advantage of the lower cost of Indian programs.

The IIMs are insistent that they are not placement agencies.  Their priority is providing an academic experience of the highest international standard.

While all Indian B-schools offer a range of placement support to students in their one year programs, they all make it clear that placement cannot be guaranteed.
 The fact remains, however, that for virtually all applicants to these programs, placement post-graduation is a top priority.

All the schools continue to provide placement support for the students after graduation.

The results vary from year to year depending on market conditions, the quality of the students themselves and also the fact that it has taken time for recruiters to become aware of how to position the more experienced graduates of one-year programs in their companies.

For instance, for the batch that graduated earlier in 2013, IIMB’s EPGP program seems to have had the most success.  71 students out of a class of 74 have been placed (96%), with most achieving significant career enhancement with a substantial jump in position, remuneration and level of responsibility.

Many moved into jobs in new functions and sectors, the average salary was Rs 26 Lakhs, and two graduates received compensation packages of one crore or more, one being placed in India and the other in the US.

The top Indian B-schools have top-flight programs and faculty, easily competitive with the best on offer in the rest of the world and at half the cost.
 But candidates need to be clear about what they hope to accomplish before clicking the send button on the application form.

If it is primarily a turbo-boost in their career progression then they may be disappointed.  If on the other hand they find themselves dissatisfied despite a good job with a high salary and seek to challenge themselves intellectually and open themselves to a potentially transformative experience, then pressing the send button can be the first step on a life-changing journey.

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