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Last updated: September 23, 2010 11:37 am
Indian business schools are under pressure like never before. The elite institutions, such as the IIM-A and the Indian School of Business, are besieged with applicants, all eager to earn a qualification which can launch them into the top league of Indian management.
But these business schools realise that to earn a place at the top table of global business schools alongside Harvard, Stanford and London Business School, they need to appeal to a global audience and attract non-Indian students, professors and corporate partners.
To compound the problem, these schools will soon face competition from North American and European business schools, which will be able to offer programmes in India as the government liberalises the higher education market.
So, do Indian business schools teach the kind of international curriculum needed for the next generation of global managers? Do they provide an alternative for Indian managers who want to avoid the inconvenience and the expense of studying in the US or Europe? And is now the time for non-Indian managers to consider studying for a Masters in Management degree or an MBA at an Indian business school?
On Wednesday September 22, a panel of experts answered your questions on this page:
On the panel are:
Ajit Rangnekar is the dean of Indian School of Business.
Sanjay Gonchigar is studying for a post graduate programme in management (PGPX) at the Indian Institute of Management, Ahmedabad (IIM-A). His answers below are his own views and do not necessarily represent the official views of the IIMA.
Bakul Dholakia is a former director at the Indian Institute of Management - Ahmedabad.
James Fontanella-Khan is the FT’s Mumbai-based India online editor.
To continue this discussion, send your questions and comments to the FT Business Education forum
India’s own GDP is poised to expand by as much as four times during the next 10 years, so will be the need for business leaders. These leaders need to be groomed to be successful in the Indian culture. First question, do you think that there is a need for overseas institutions to tie up with the leading Indian business schools to succeed? On their own they will fail. Do you agree?
My second question is will the excessive regulation, like the AICTE (All India Council For Technical Education) approval, stifle the best business schools from meeting the multi-faceted dynamic needs of businesses? The role of the government should be restricted to regulating the growth of fly-by-night unscrupulous institutions. In other cases, let the market forces prevail. Do you agree?
Bakul: In the field of business education, institutional collaborations have played a significant role, especially during the last two decades. In the distant past, such collaborations were largely among the business schools in Europe and North America. However, during the last decade, institutional tie-ups and collaborations between European and American b-schools and Asian b-schools have emerged as a major phenomenon, adding significant value to the MBA programmes offered by the collaborating institutions on both sides. In fact, such collaborations of European or American b-schools with leading Indian b-schools in the broader field of executive education including executive-MBA can also be a win-win situation for both.
In my view, such tie-ups should be considered as effective instruments for significant value addition, rather than being viewed as preconditions for success. I feel that the quality of business education imparted in premier b-schools in Europe or North America is excellent even on a stand alone basis and there is no reason to believe that their MBAs may not succeed in an Indian business environment. After all, a significant proportion of the students of these b-schools are Asians, who not only have adequate understanding of the socio-cultural aspects of business environment in Asia, but they also bring these perspectives into the classroom as well as their group project work, which helps their classmates from Europe and America to understand and appreciate these aspects.
However, a formal and effective tie-up with a leading Indian business school like IIM-Ahmedabad or ISB will certainly enhance the ability and skills of the MBA students from European and American Schools to succeed in Indian corporate culture and business environment. I may also add that such tie-ups will also be immensely useful for the Indian students pursuing their MBA in India.
Regarding your second question, I agree with your observation that the role of the government regulation should be restricted to dealing with the fly-by-night operators and unscrupulous elements.
Ideally speaking, the regulatory bodies like AICTE should not interfere with the functioning of premier institutions like IIMs or ISB. As of now, IIMs are virtually out of the purview of AICTE, but they do fall under the direct control of the Ministry of HRD (Human Resource Development).
However, by and large IIMs have enjoyed a fair degree of autonomy in their functioning and they have always enjoyed full autonomy in all academic matters since their inception. For instance, I never faced any constraints in expanding capacity of the two year MBA programme or launching new one year programmes in General Management (PGPX) and Public Management & Policy (PGP-PMP) at IIM-Ahmedabad during my tenure. I also did not face any constraints in entering into new institutional collaborations with European and American b-schools and, as a result, I could increase the number of effective institutional collaborations from 12 in 2002 to 50 by 2007. But, the main constraints arising from regulation faced by IIMs today are in fields like the appointment of director and chairman of the governing board, faculty compensation, setting up overseas campuses, etc. There is a need for greater autonomy to be given to the institutes of excellence like IIMs to facilitate their upgradation to the global quality standards.
Sanjay: Any good international b-school programme will recognise the increasing importance of India and China on the global stage and ensure that their students are adequately exposed to the various facets of doing business in the Asian economies. With every passing year we do see increasing levels of co-operation, exchange programmes and tie-ups between overseas and Indian business schools. All these interactions result in significant value addition for the participating institutions, students and the faculty.
At the same time, will an overseas institution necessarily ‘fail’ if it does not tie-up with a leading Indian business school? I do not think so; because a ‘tie-up’ is a good approach, but not the only approach for including the India aspect into an MBA programme.
About the AICTE approvals, the original regulatory framework was laid out during the decades when an MBA was essentially a two year programme. The intent was to ensure standardisation of technical education (including management courses) by setting the basic criteria for various components of an institution such as infrastructure, faculty, and student strength (i.e., the maximum number of students that an institute can admit, given the facilities they have).
While the AICTE has served its purpose to a large extent in protecting the interests of the students, some of its archaic rules do need a revision. Especially in the context of the one year management programme format which is gaining popularity across the world. The recent approval (with some caveats) of the Great Lakes one year management programme is a positive indication that there is change underway.
James: Regarding your first question, I do not think Indian business school need the help of overseas institutions to “produce” good leaders. However, it is crucial for Indian schools to give their students an education that makes them fit for an ever more globalised world. Indian students need to be trained to work in Mumbai as much as in Shanghai, Sao Paolo, New York and London. Indian students should “think global and act local”, as Duvvuri Subbarao, the governor of the central bank of India, said recently at a conference in Mumbai. That is the way forward.
Regarding your second question, the government should allow business schools, Indian and overseas, to provide the kind of education they feel is best for their students. It will then be up to the students to pick up their preferred institutions. Regulations, at a university level should be kept at a minimum.
I believe that the government should focus on facilitating the emergence of new schools to allow a greater number of students to access higher education. At the moment hundreds of excellent students are being turned down by the country’s top business schools simply because they cannot accommodate everybody. The sector needs to be opened up, to give more people a chance to get a high level education at an affordable price. The government should let institutions grow freely and openly, it will be for the benefit of all.
Ajit: The global institutions may prefer to join hands with reputed local Institutions for three reasons.
1. Access to faculty who can steer the India focused research and teaching agenda.
2. Knowledge of the Indian education market, especially student demographics, and recruiter relationships.
3. Ability to understand and manage the legal and regulatory environment.
Part 2 - the government is aware of this problem, and the regulatory changes being introduced in the new educational reform bills should hopefully make it easier for all institutions to operate more effectively. If not dealt with properly, the stifling regulation can deter international institutions from venturing into India.
The reason why Indian business schools fail to make it to the top league is the absence of international students. MBA is all about cross cultural and global experiences. At IIM/ ISB, I would like to know whether any steps are being taken to expand the admissions process to other nationalities, just like US/UK business schools?
Bakul: The main reason why Indian b-schools fail to make it to the top league globally is their inability to attract globally renowned faculty on a full-time basis and also the lack of full autonomy covering all aspects of their operations. With a significant expansion of the international student exchange programme, most premier institutions like IIMs have a significant number of international students on their campuses practically during the entire academic year.
For instance, at IIM-Ahmedabad, at any given point of time during the academic year, there will be around 30 to 40 international students mostly from European and American b-schools present on the campus and participating in various courses and group projects. While the proportion of international students in the class may be relatively low, it does serve the purpose of bringing cross-cultural perspectives in the classroom and also on the campus.
In addition to this, around 100 Indian students go to leading international b-schools every year on exchange programmes for one semester. Another major source for gaining cross-cultural perspective and global exposure is the significantly high proportion of overseas summer internships available to Indian students studying in IIMs. Every year, around 80 students of IIM-Ahmedabad get summer internships abroad.
The new one year post graduate programme, PGPX, introduced by IIM-Ahmedabad in 2006 has succeeded in attracting international students on a full-time basis. But, the proportion of overseas nationals studying in Indian b-schools on a full-time basis remains low and it has to increase significantly if Indian b-schools have to acquire a truly global element.
The crucial issue here is not expanding the admission process per se, as the admission process in any case is open to all overseas nationals even today. The basic problem is the fierce competition for getting admission into a premier institution like IIM-Ahmedabad. We get around 250,000 applications for 450 seats. While the domestic applicants are required to take the Common Admission Test (CAT), the overseas applicants can apply on the basis of their GMAT scores. But, given the concerns for parity in test scores, overseas applicants with GMAT scores below 750 usually do not make it. Moreover, admissions to IIMs are always on the basis of test scores, prior academic background and performance in interviews.
International students are also required to attend an interview. While IIM-Ahmedabad conducts interviews in USA and UK for the one year programme PGPX, the same is not the case for the two year MBA programme. Maybe, the time has come for the IIMs to consider the similar arrangement for the two year programme as well.
Ajit: Just for the record, ISB has been ranked in the top twenty global schools by FT for the past three years, so it is not fair to say that Indian schools do not feature among the top schools. International students is only a small part of the reason why Indian Institutions do not feature among the top global schools.
The absence of research, and the fact that most of the students do not have prior work experience against which to compare their post qualification performance is a major factor too. We do get about 25% of our students with international experience, but they are Indians. International students will come to India when India is recognised as a major education centre, when India is seen as a desirable destination for expatriates to live in, and when Indian institutions can give an ‘MBA’ degree instead of the PGP diploma or certificate. Yes, we do have a global outreach programme, and we now have a small (5%) but growing international student presence at the ISB.
Sanjay: Yes, for an MBA programme to be relevant, it should include a significant component of cross cultural experiences. IIMA recognises this need and has been working towards internationalisation of its programmes.
During the candidate evaluation for the PGPX, adequate weighting is given to the international experience aspect. Looking at the current batch profile:
•79 (91.86%) have international exposure in terms of work and studies.
•36 (41.86%) were residing outside India, spread across seven countries.
•7 (8.14%) are international students - 2 are international citizens and 5 are international permanent residents.
Using GMAT as an admission evaluation component is also aimed at attracting international students.
International exposure is also achieved via exchange programmes and academic components that have an international aspect. The Institute is also working towards increasing the diversity factor in the faculty by engaging with professors from outside India.
Coming to the various global MBA rankings, they are a significant platform for showcasing a business school and for encouraging international students to apply.
There are several practical and theoretical reasons behind why some of the top Indian business schools do not feature in the global ranking tables. For example, the IIMA PGP is not included in the FT ‘MBA’ rankings since it is not a pure post-experience programme. The PGPX was not eligible due to its relatively recent vintage.
ISB blazed the rankings trail for Indian b-schools by making an impressive debut in the FT’s Global MBA rankings, I understand that the IIMs too are looking at participating as and when their programmes fulfill the ranking eligibility criteria.
James: I know that both the IIMs and ISB are trying to recruit more international students, but they face several challenges. The ISB is in a better position thanks to its high rankings on reputed league tables (including the FT’s), but still many international students are skeptical of moving to India - more road trips outside of India are needed to attract overseas talent. Meanwhile, IIMs have a slightly trickier path, as they are government controlled and are often blocked from Delhi in any attempt to attract new talent.
What are the main topics taught at Indian business schools? Considering the global economic crisis and news about climate change, do the schools cover major subjects such as business ethics, corporate social responsibility and sustainability?
Bakul: The curriculum in premier Indian b-schools is broadly comparable to the leading global b-schools. While the core or the foundation course package is usually the same across various b-schools, the main differences arise in the elective course package and the type of specialisation offered in Indian b-schools.
For instance, it would be rare to come across specialisations like Real Estate Management or Hospital Management in leading Indian b-schools. But, most of the premier institutions in India cover subjects like Business Ethics, Corporate Social Responsibility and issues of Environment and Sustainability. Perhaps, the differences may lie in the intensity of such courses and whether they are mandatory or elective in nature. At IIM-Ahmedabad, Business Ethics, Corporate Social Responsibility and Carbon Credit & Finance are elective courses offered in the second year of the MBA programme, though basic aspects of Business Ethics and CSR are covered as parts of core courses offered in the first year by the respective functional areas.
James: To be honest I feel that Indian schools are not doing enough to address new global challenges. For example there is little attention being paid to business ethics, philanthropy, CSR and broader social topics such as climate change and development.
However, I was recently visiting the ISB in Hyderabad and I must say I was fascinated by their Centre for Emerging Markets Solutions, which is effectively fostering the emergence of businesses with a social impact. In other words the school is working closely with the private sector to create business solutions, which are economically viable, scalable and profitable, and that will provide services that are absolutely necessary in emerging economies, such as affordable housing, healthcare and education. I think India has a great opportunity to specialise in this segment by pushing students to think about developing small and medium businesses that will service the so called “bottom of the pyramid”.
However, more is needed!
Sanjay: To answer the first part of your question, at IIMA, the curriculum is structured around the following framework:
•The Fundamentals which expose students to the standard concepts, processes and analytical techniques that will be used across the MBA program, (e.g. Statistics, Economics and Accounting).
•The core courses such as Finance, Marketing, HR, Operations and Strategy which are standard functions across all organisations.
•The electives which enable students to focus on and specialise in the areas of their interest.
Throughout the course, there are case-studies, projects, assignments and other activities which allow for application of the theoretical concepts and techniques to real world scenarios and reinforce the academic learning.
The course content is reviewed and refreshed as required throughout the year, to ensure that the programme is in sync with the changing political, environmental and economic realities of the world.
Coming to the second part of the question, the answer is ‘yes’. Business ethics, Corporate reputation management and Leadership values are core courses at IIMA PGPX.
In recognition of the importance of subjects like climate change, CSR and Sustainable development; the Institute offers several electives such Carbon Finance, Research and project work on ‘Bridging the divide’ and GRIT (Globalising and Resurgent India through Innovative Transformation) - which enables students to work on projects for inclusive growth across the fabric of the Indian society.
Students are also encouraged to explore entrepreneurial and career options in areas like renewable energy, NGOs etc.
Ajit: Indian Schools are fully aware of not just ethics and environment, but also of the need for including the agenda of inclusive growth in the curriculum. Just one word of caution - teaching ethics is not just about including a course on ethics. This is a complex area. Briefly, we have to provide frameworks for students to understand the ethical dilemmas, evaluate the costs and consequences, and negotiate with vested interest to get them to accept an ethical solution.
What are the challenges you face in trying to recruit good faculty for Indian business schools? How has this changed in the past few years?
Ajit: There is a world wide shortage of high quality PhDs. Our biggest challenge is convincing bright young aspiring faculty to move to India, especially if their performance and tenure are based on strong academic research.
Most of the top academic journals are from outside of the USA, and tend to focus on issues that are seen as relevant to their majority constituents who are in the US.
Most of the top academic conferences are also held in US and western Europe. There are few top researchers in India. It is difficult for young faculty to be a part of that ecosystem from a distance.
Senior faculty members are often willing, but in many cases their spouses who have their own career and children resist the move. We are building a local ecosystem of researchers among faculty in India and the Far East.
We also invest substantially in hosting global conferences here in India, and specially inviting top researchers to spend time here. We incentivise our faculty by sponsoring their attendance at research seminars, and have good budgets for joint research with our associate schools, Kellogg and Wharton. We have been able to increase our recruitment from four faculty five years ago, to over 40 now.
Bakul: We face formidable challenges in recruiting world class faculty in IIMs. Ideally, we would like to recruit faculty who have doctorates from top ranking global institutions, significant teaching experience at post graduate level in reputed b-schools, relevant industry or consultancy experience, significant number of research publications in internationally acclaimed journals and a passion for teaching and research work.
It is getting increasingly difficult to identify such resources who would be interested in working full-time in India for a long period of time. The annual output of PhDs in various fields of management from good academic institutions in India is quite low and only a small proportion of the PhDs from reputed overseas institutions would be interested in full-time jobs in Indian b-schools. For public institutions like IIMs, the problem is compounded further by the strict regulations regarding faculty pay scales and other terms and conditions of employment imposed by the government.
However, with the revision of pay packages implemented by the central government in 2009, the relative position of IIMs has now improved in this regard, though our faculty pay packages are still way below the comparable packages in leading international b-schools, even when we consider currency conversion at purchasing power parity (PPP).
At IIM-Ahmedabad, we try to supplement the faculty salary with liberal norms for consultancy and also provide additional cash incentives for producing high quality research and, as a result, our recent experience in faculty recruitment has been encouraging.
I have three years of experience at a global company offering IT and business solutions. My graduate results are not good and I want to apply for an MSc in Management. This degree does not require any work experience.
Does work experience really play a crucial role in securing a place in the top schools? If yes, how can I improve my chances?
Sanjay: If you look at the candidate evaluation criteria for any good b-school programme, past academics are given a certain weighting, but they are not only factors for selection. The applicant’s performance in the admissions test (GMAT / CAT), interview, work experience, extra-curricular activities and significant achievements – all of these are factored in to holistically evaluate all applicants.
As long as you fulfill the basic requirements for your target b-schools, you should go ahead and apply. You can also apply for the MSc programme as a back-up.
Indian b-schools offer various programmes for both freshers and for experienced students. Programmes which are primarily aimed at candidates with prior experience will look at the quality of your work experience (not necessarily the length), career progression and clarity of purpose.
Bakul: To secure admission on the two year MBA programme at IIMs, you do not need significant work experience. What you need is an excellent score in CAT and to attend an interview. Significant work experience, high GMAT score and sound academic background are the pre-requisites for admission to one year programmes like PGPX at IIM-Ahmedabad.
What advice would you give to Indian business schools to enable them to compete effectively with schools from Europe and the US?
Ajit: Every school has to be clear about what its competitive advantages are, and hence its attractiveness to the potential students.
India and China are the big booming economies in the world today. Every major company, wherever it is based, will want to know how to do business in these countries. Indian b-schools are best equipped to teach this.
India also has a terrific opportunity to innovate new business solutions to societal problems of the disadvantaged people, e.g., skills development, healthcare for the poor, affordable housing, etc. These business models, if successful, will open new opportunities for global businesses to serve the over 4 billion poor in the world. Indian b-schools have to effectively market these opportunities to the aspiring MBA students.
Sanjay: Using an analogy from the proverb “Physician, heal thyself”, I would say “B-school, analyse thyself”. After all a management school teaches techniques like the rudimentary SWOT analysis to evaluate an entity with respect to its competition.
The quality of a b-school is the sum total of the quality of all the critical components, such as the infrastructure, the faculty, the students, the level and quality of interaction with the industry and the responsiveness of the b-school to adapt to the changing environment. All these aspects can be critically evaluated to identify and prioritise improvement opportunities.
Bakul: Indian b-schools need a well formulated and focused strategy to compete effectively with leading European and American b-schools. The main elements of such a strategy for IIMs would include the following :
IIMs must undertake significant expansion in terms of both faculty strength and student intake in the two year as well as one year MBA programmes. For instance, IIM-Ahmedabad should at least double its existing strength of full-time faculty.
Faculty members in IIMs should concentrate on producing significant research output, which gets published in top class international journals and also simultaneously focus on producing a large volume of contemporary cases covering a wide range of industries, services and functions. For this purpose, IIMs should explore possibilities for collaborating research programmes with reputed international institutions.
IIMs must obtain international accreditation from well established bodies like AACSB and EQUIS.
IIMs should enter into collaborations with leading global b-schools for effective faculty exchange programme.
IIMs must upgrade their physical infrastructure to achieve global benchmarks.
The financial resources of IIMs need significant upgradation. Alumni of IIMs need to make a much larger financial contribution to their alma mater, as the alumni of all leading international b-schools always do.
IIMs must substantially increase their interface and interaction with both domestic and global corporates. Their alumni network could provide the initial fillip in this direction.
IIMs must take their executive education programmes overseas on a much larger scale.
When IIMs succeed in achieving most of the above goals, they would also succeed in attracting international students and overseas faculty on a full-time basis.
It is obvious that IIMs will require full autonomy from all forms of government regulations to achieve significant global recognition. I firmly believe that top ranking IIMs like IIM-Ahmedabad, IIM-Bangalore and IIM-Calcutta have the potential to achieve this and they actually deserve a global ranking.
What are the advantages of studying a post-graduate business course in India, such as PGPX?
Ajit: It is the same advantage, whether you are studying for the normal “MBA” equivalent, or for an EMBA type of a full-time or a part-time programme. India is itself a huge market, and a strong understanding of Indian business is necessary for all global companies. Studying in India also helps one to develop one’s own network of tomorrow’s leaders in an important market like India.
Sanjay: Why a post-graduation in Management?
An MBA from a good b-school is an excellent learning opportunity and some would even call it a ‘life-changing’ experience? Either starting your career with an MBA on hand, or stepping back into academia after some work experience, there are obvious advantages in either case.
Why programs like PGPX?
One obvious advantage we are seeing is that given our prior work-experience, we find it easier to grasp the relevance of the concepts and techniques that are discussed in class. For example, having managed teams and operations, I can relate my experiences to the theoretical aspects of Operations Management and Organisational Behaviour. Also, the level of peer-to-peer learning and quality of debate in class is much higher.
Why an MBA in India?
Currently the top Indian b-schools are comparable with the best across the world in terms of academics, infrastructure, career opportunities etc. There is also a financial advantage as a top Indian b-school is still more affordable than a US or European b-school.
Yes, there several areas of improvement, but most of them are work in progress.
Bakul: PGPX at IIM-Ahmedabad is positioned in the same league as the top ranking global one year MBA programmes offered by leading b-schools. The class of PGPX has a fairly large proportion of overseas students and usually more than 90% of the students have significant international exposure.
The faculty - student ratio in PGPX at IIM-Ahmedabad is generally around 1:2, which would rank among the best globally. The student quality is exceptionally high, and given their average age of over 32 years and average experience of over 10 years, their commitment and motivation levels are very high, which contributes to a rich classroom experience. IIM-Ahmedabad also has EQUIS accreditation.
Placements of the first four batches of PGPX have been excellent and comparable to those at leading b-schools globally. The added advantage is that the cost of pursuing PGPX is significantly lower as compared to leading b-schools in Europe or USA.
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