B-schools at the crossroads

A barrelling economy. Emerging business models that have the international business community keenly watching. At least half a dozen sunrise sectors shooting off the charts. Fastclipping businesses chasing new markets both in India and overseas. Outside-in foreign interest scaling record highs.

The world of Indian business, it appears is in churn - in an enriching kind of way - like never before. That should be scintillating news for the aspiring managerial class. Especially the thousands waiting on the sidelines of India Inc. to dive into jobs that will bring them wealth and respect. Respect which can come through that muchchased stamp of an MBA, a Masters in business administration. A certificate from a business school, or B-school, that will fast-track them through the early decades of what is promised to be India's century.

Here's the list of top 30 B-Schools in India

Hold on. That is the 10,000-foot view. Closer to terra firma, it's a churn of a different kind. One that has business graduates wringing their hands dealing with what hirers call "employability" issues, B-schools changing themselves to reflect the rapidly morphing world of business, recruiters seeking custom-made programmes at management institutes to suit their workplaces and industries, and foreign B-schools gingerly feeling their way in the world's second-fastest growing major economy.

Welcome to the context in which Business Today presents its Best B-schools annual. As much as each of the above factors finds reflection in our rankings, put together with market researcher The Nielsen Co., sometimes it does not seem that way. That may sound confusing but is true.

Rankings reflect the perception of the target audience and the 2010 and 2009 surveys are the best examples of that. In a year of financial meltdown, the value proposition was the top factor at work. Amity Business School, which charged a modest Rs 4 lakh in fees compared with over Rs 10 lakh at the Indian Institutes of Management (IIMs) and other top tier B-schools, vaulted to the Top 10 list last year for the first time since our surveys began in 1998. It didn't seem to matter that Amity was perceived a clear rung below the aristocracy.

This year the tables have turned, and Amity has come in at No. 27 in the rankings. The snoot club is back in the velvet, thanks to the strength of the economic recovery. And yet, the haute table has its surprises: we have three new place-cards in the 2010 Top 10. The Faculty of Management Studies (FMS) of the University of Delhi has moved seven ranks to No. 4 from No. 11 last year. Sure, FMS is not expensive at all, charging just Rs 10,000 in annual tuition fees, but what about the Indian School of Business (ISB), Hyderabad, which costs nearly Rs 12 lakh for a one-year programme? ISB climbed to No. 7 in 2010 from No. 13 last year.

IIM Indore also makes its way back into the Top 10 after it fell to No. 12 last year. The upward march of these B-schools has pushed Symbiosis Institute of Business Management, Pune, and Jamnalal Bajaj Institute of Management Studies, Mumbai, to No. 13 and No. 14 respectively, from a high No. 4 and No. 5 last year.

IIM Ahmedabad stays overall leader of the Indian B-schools pack by a mile, a position it has maintained for the last eight years. What is the secret sauce that keeps the school ticking? Nose to the grindstone execution, says director Samir K. Barua. "The ability to do the basics of good academic processes right, day after day, year after year, is the reason why IIM-A continues to be able to deliver top quality education," he says.

That courses are delivered on schedule by a competent faculty and programmes are continually updated help, he adds. 'On schedule' and 'competent' could well be the key phrases that set IIM-A - and the top half of the pack - apart from the rest. Otherwise there is no dearth of courses and no shortage of programmes that are on offer from a motley bunch of institutes that range from the third rate to those bordering on the fraudulent. To understand the swirls and eddies that put B-school education at the crossroads in India today, some context is instructive.

As a nation, India produces the highest number of MBAs in the world. If you shrugged at that saying India has more than 1.1 billion people and producing 200,000 MBA graduates is not a big deal, think again. Some estimates put the number of newbie "managers" higher because there are scores of fly-by-night B-schools not certified by the All India Council for Technical Education, or AICTE, a statutory body governing technical and other higher education, or recognised by the University Grants Commission (UGC), which sets standards for university level education.

China has 200 B-schools. India 10 times that with some 2,000 government-certified B-schools awarding MBA degrees, or an equivalent and, often, more valuable diploma versions (like those given by the IIMs). Consulting group Technopak presents a more sophisticated look at the situation. India has nearly 100 management school seats per billion dollars of GDP, compared with about 11 in the US, 13 in Britain and some six in China.

Technopak's estimate of 100 seats per billion dollars of national income in India is based on a conservative 120,000 "production capacity" of MBAs in India. Take that up to the more widely accepted 200,000 number, and it rises to 160 managers for each billion dollars of GDP. And there are no signs of slowing down. Experts reckon that between 150 and 200 new institutes apply to the AICTE for permission to set up B-schools every year.

To be sure, you don't need AICTE or UGC approval to set up a B-school or management institute but do need a green flag from them if you want to award a post graduate degree or tom-tom that your B-schools is "government recognised", a stamp that still is a big draw among management degree aspirants. "A number of institutes are set-up as study centres for distance education degrees. We estimate that capacity is growing up by over 20 per cent every year," says Bharat Gulia, a senior manager tracking education sector at audit and consultancy firm Ernst & Young. "Most B-schools are little more than finishing schools and, that too, poor at it."

The result is that thousands and thousands of business grads being produced are way behind on employability - or the ability to take managerial jobs without heavy doses of training. "While the top 30 to 35 schools churn out good or industry-ready talent, the others struggle to match up. We focus only on the top 25 to 30 schools to meet our staffing needs," says a spokesperson for Infosys Technologies. Preety Kumar, Partner at headhunter Amrop India, says she finds a lot of challenges around B-school grads. "I would any day hire an MA in Economics in place of an MBA who has unrealistic expectations vis-a-vis his skillset," she says.

All this makes for a sweet spot for Nishant Saxena. In an upcoming locality of Gurgaon, south-west of New Delhi, is a nondescript office of Elements Akademia, which runs a chain of finishing schools offering rigorous "employability" training. Among willing takers for its modules are Tier II and Tier III B-schools (Gyan Jyoti Institute of Management, Chandigarh, and Business School of Delhi, Greater Noida, to name two) that are mushrooming all over India.

Saxena, Founder of Elements Akademia and himself an IIM Lucknow alumnus, has not yet started to work with any of the top 50 B-schools in the BT-Nielsen rankings, but that may just be a matter of time - apart from the top four on our list this year, all others have scores below 1 on the zero to five Brand Equity Index that Nielsen, the world's biggest consumer measurement company, uses while arriving at the rankings. E&Y's Gulia predicts a shakeout among B-schools.

At the top B-schools, the challenges are different. In the aftermath of the slowdown - set off on Wall Street by greedy banks and greedier bankers in 2008 - when the ethics of individuals and compensation structures in organisations were put under the scanner, the one question that educators and employers asked was: is there a need to rethink business education? B-schools in the US and Europe have been introspecting on this deeply - Harvard Business School has instituted a Hippocratic Oath for students - and changing how they teach.

So are Indian management institutes. FMS has introduced new syllabus that teaches new modules on corporate social responsibility and ethics. What's taught as part of a course on ethics? Simply, what's the "right" way of doing business: how to replenish value that is extracted from society and how to see beyond just shareholder value. In Gurgaon, Management Development Institute has introduced compulsory papers on ethics and corporate social responsibility across its courses.

IIM Kozhikode has new modules on social transformation in India that talks about how villages work, how rural folk share resources. IIM-K, in fact, wants to be an equal opportunity institute through gender diversity and focus on the underprivileged. "IIMs can't be elitist; the idea is to globalise Indian thought," says Debashis Chatterjee, Director. These changes have a strong connect with B-school rankings. The institutes that make a successful transition meeting new management education needs will be the ones likely to retain or improve their standing. Sunil Rai, CEO of the 15-month-old Mumbai Business School, knows this well and is modelling the institute's programmes on medical colleges. His experience-based approach to B-school pedagogy is based on context of "where to apply, when to apply and how to apply" theoretical concepts in real-life situations, says Rai, former Joint Director at S.P. Jain Institute of Management & Research, Mumbai.

As business education matures in India and recruiters demand new skills, the gap between the top B-schools and those lower down will only widen. There will be a more cross-border selection by wealthy students as the fee differentials slim between Tier-I Indian B-schools and counterparts elsewhere and quality of exposure overseas attracts them.

Even today "getting an MBA in India does not mean that things are cheap," says David Wilson, President and CEO, GMAC, which conducts the Graduate Management Admission Test and counts over 30,000 applicants from India - more than three times the number in 2005. At over $40,000 for a programme "the fee in top-tier B-schools here is comparable to international education costs," he says.

For the larger population of B-school aspirants, the road ahead will mean taking a hard look at returns from their MBA investment. For working executives, it will be mean factoring in the opportunity cost of taking time off from work, even if it is for one year. The truly interested and ambitious manager-aspirant will ask ever tougher questions about the quality of faculty, international affiliations and even the industry-specific courses on offer.

Employability and potential prosperity will out-rank the temptation to go for a quick and easy piece of paper certifying nothing more than another frustrated job-seeker. When the hordes that knock on B-schools' doors begin to make more hardnosed choices, the air will look less turbid.