Why are international business degrees popular among Indians?

International Business Degrees

I was thrilled when a leading international publication reached out a few months back for an interview. The journalist shared a list of questions and I sent off the responses quickly. Then I waited, fantasizing about the global exposure that MBA Crystal Ball would get for free. But I never heard back from the team.

It was the second time this happened. A few years back it was a different journo from the same international publication. Similar tragic end.

Months later while cleaning up my folders, I stumbled upon the responses from the recent interview. The journalist’s questions seemed more interesting than my responses.

So I thought of posting it here for you enjoy, and possible help me understand what exactly he was trying to find out.

Enjoy the interview that never happened!
 


Why do Indians chase international business degrees?

International Journalist: For Indian citizens, is an MBA the new BA, e.g. now that so many people have BAs, and rewarding, high-paying jobs are at a premium, is it increasingly important for Indian people interested in business, or already working in business, to have an MBA?

Sameer Kamat: In India, the traditional 2-year MBA programs accept applicants with little or no experience. Given the huge supply of qualified manpower, recruiting companies looking at filling up junior level positions are spoilt for choice. An MBA is one way for new graduates to stand out from the crowd, not just for managerial roles, but also for operational and technical roles.

But there’s another reason why the MBA degree is popular in India.

For a large number of Indian students, due to the crazy level of competition, the choice of undergrad degrees is driven by entrance exams and academic grades. Parental pressure to choose safe, mainstream options also plays a significant role.

Aptitude and interest often take a backseat. During the course of the 3-year or 4-year undergrad degree, many realise that they don’t want a career in their area of academic specialisation. Many feel an MBA degree can give their career a new direction.

In contrast to the 2-year Indian MBA, the 1-year MBA offered by ISB and several IIMs is a relatively new entrant in the Indian market, but gaining rapidly in popularity. Like the MBA programs offered in the U.S. and Europe, it is aimed at professionals with several years of experience.
 
Journalist: As in the U.S., there are high-quality and lower-quality MBA programs in India – what’s the breakdown in India between the good ones and the mediocre ones?

SK: Just like in the U.S., there definitely is a pecking order among MBA programs in India too. You could visualize it as a pyramid.

A few programs (like the top 3 Indian Institutes of Management – IIM-Ahmedabad, IIM-Bangalore, IIM-Calcutta) enjoy the lion’s share of the adulation (from students, professors, recruiters and the media).

Many of these graduates get lucrative jobs in consulting (strategy and technology), finance (investment banking, corporate banking and private banking) and general management (e-commerce, consumer goods, information technology).

The next tier would consist of names such as the Xavier School of Management (XLRI), Faculty of Management Studies, S.P. Jain Institute of Management and Research, Jamnalal Bajaj Institute of Management Studies, Management Development Institute and a few more.

A notch lower would be the MBA programs that don’t figure often on the national radar, but they have strong ties with the regional recruiters.

At the bottom of the Indian MBA pyramid, there are tons of bschools that struggle at every step – from attracting good applicants to getting them good jobs after graduation. As their brands aren’t strong enough to attract applicants, many rely on agencies to get them ‘leads’.

For marketing agents, the incentives for a successful conversion can be huge. For students who join such programs, the probability of getting disappointed is high.

Among the 1-year MBA programs in India, the leading B-schools are: Indian School of Business, IIM-Ahmedabad, IIM-Bangalore, IIM-Calcutta. The programs offered by these institutions have exotic names (such as PGP, PGPX, EPGP, PGPex), but they are all similar to the 1-year MBA programs offered across the world.
 
Journalist: What drives the demand among Indian citizens for U.S. MBA education?

SK: In terms of statistics, there hasn’t been any dramatic change in recent years of Indian citizens looking for international MBA degrees. According to GMAC, in the last 5 years, the number of GMAT test takers from India has been range-bound between 25,000 to 30,000. This includes Indians applying to bschools in India, U.S. and other countries.

GMAT India Trends
Image Source: GMAC Geographic Trends Report

However, from all the online (on the MBA Crystal Ball blog and forum) and offline (email) queries that we get from professionals who’ve been working for a few years, there does seem to be a trend.

For starters, there’s the feeling that their undergrad degrees (mostly in engineering) wouldn’t be the differentiating factor when it comes to better career opportunities, higher salaries and international mobility.

The other motivator is for folks who feel they are trapped in the wrong field. Unlike the earlier generation where a single job for life was the norm, many young Indian professionals today don’t see themselves retiring in a job they don’t like.

It’s a known fact that the MBA applicant pool from India is dominated by Male / IT / Engineers working in software companies. What is not very obvious is that their undergrad specialization is quite diverse (mechanical, electrical, mining, aeronautical engineering) and often not related to software.

Compared to the tough field jobs that don’t pay so well, jobs in the tech world offer salaries, perks and working environments that seemed more attractive during campus recruitment.

But within a few years of working in technical roles, several professionals get the feeling that their career trajectory has stagnated earlier than expected. An international MBA seems like a good option to recharge their career and take it in the direction that they want.

Of course, there are applicants from other streams like finance/marketing as well, with overlapping sentiments about growth and career-change opportunities.

Each year, a small proportion of applicants who reach out to MBA Crystal Ball includes folks who already have an MBA from tier-1 and tier-2 bschools (including the IIMs).

Some of them are earning more in India (after adjusting for purchasing power parity) than the average post MBA salaries published by the top US B-Schools.

The big driver for second MBA applicants is the potential of gaining a globally relevant qualification and access to overseas opportunities.
 
Journalist: As in the U.S., having an MBA for an Indian citizen can increase a person’s value as a potential spouse – how much of a role does marriageability play in the pursuit of MBAs among Indian citizens? Are there demographic differences in regard to this situation?

SK: A marriage counsellor might have better insights on this topic than an admissions consultant. With that disclaimer, let me share some thoughts.

Young, ambitious and independent Indians face a strange conflict. When it comes to career decisions and financial investments (an MBA involves both), they have a bigger appetite for risk than the earlier generation.

However, for important personal decisions like marriage, they still have to contend with a lot of ‘stakeholders’.

Given the importance of family ties in India, it can get tough to take completely independent decisions without taking into consideration the (often traditional) views of parents and close relatives.

While qualifications and compatibility are important aspects that Indians look for in a spouse, there’s another one that comes under close scrutiny – financial security. I’d assume that an MBA student with a $100,000 education loan and no job in hand would appear to be the most vulnerable.

Of course, the perception changes rapidly after the MBA graduate settles in a good job with a reputed company.

In all these years in my role as an admissions consultant to international MBA applicants, I haven’t come across anyone who wanted a top MBA primarily to enhance their marriage prospects. And thankfully so!
 
Journalist: How much awareness among employers in India is there concerning the different qualities of different MBA programs, both in the U.S. and within India?

SK: Most Indian employers who regularly recruit MBA graduates are aware of the quality and calibre of Indian MBA programs (i.e. the traditional 2-year format). That’s where the bulk of graduate level recruiting has been happening for many years.

Based on B-school’s reputation, geographic proximity and prior recruiting experience, many companies flock to their favourite Indian B-schools each year.

The lines start blurring rapidly for international MBA programs. The top firms in consulting, banking and other industries are aware of the top international MBA brands. However, for a majority of Indian companies, the volume of MBA graduates with international degrees employed by them is overshadowed by the MBA graduates from the traditional Indian MBA programs.

I can cite the example (true story) of 2 MBA grads working for a leading Indian pharmaceutical company. One graduated from a Top-10 U.S. bschool. The other one’s alma mater (another U.S. B-school) isn’t even in the top 50.

They are both in the same role in India and earning the same salary (3 Million Indian Rupees, or roughly 49,000 USD). The money is quite good by Indian standards.

But our top-10 friend, who had to endure a more rigorous admissions process and paid a huge premium for the degree, isn’t very thrilled about this.
 
Journalist: How much awareness of this difference is there among the Indian public?

SK: In terms of brand recall, the IIMs rule the roost and there’s a pecking order there as well, with the top 3 IIMs topping the MBA ranking charts consistently. There are several IIMs in other cities as well like Lucknow, Kozhikode, Indore and others.

Apart from the IIMs, there are many others that enjoy a good reputation as well, including the names that I mentioned earlier.

But in contrast to companies and professionals who are familiar with the MBA landscape in India, the general public is less aware of the nuances between individual brands. As in the case of IITs, there’s a tendency to bunch the IIMs together, much to the chagrin of the MBA grads.

In the case of international MBA programs, the level of awareness drops significantly. For the common Indian, many of the top U.S. bschool names won’t ring a bell.

Kellogg’s (the cereal company) has done a much better job of brand building in India than Kellogg (the b-school).
 
Image Source: Cambridge graduation (The Guardian)


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Sameer Kamat //
Sameer Kamat
Founder of MBA Crystal Ball. Author of Beyond The MBA Hype & Business Doctors. Here's more about me. Connect with me on Google+ | Twitter | Facebook | Linkedin

4 Comments

  1. Rohit says:

    Hello Sameer,

    My name is Rohit 27 years of age. I’m right now working for a Japanese MNC in India in Technology domain. have a total work Ex of 4.5 years.
    Planning to start preparing for my GMAT so that i can do an MBA from ISB/IIMX/Universities in Singapore, the reason being they are a sorter duration courses when compared to 2 year full time MBA. I intend to appear for GMAT in Mid 2016 and secure admission in 2017(work ex then will be 6 years).

    will MBA of 10-15 months course from the above mentioned colleges help push my career? what do you suggest be the best approach in my case?

  2. Shraddha says:

    Hello Sameer.
    I’m Shraddha, second year BBA student. I want to go abroad for post graduate studies. What road map would you suggest? And if I decide to do post graduation in India itself, what are the chances of me being able to get a good job abroad?
    10th 93%, 12th 60% and graduation first class till now. Thanks in advance! :)

  3. Sameer Kamat says:

    @Rohit: As you’d see from the placement statistics published on many of the shorter duration programs, a 1 year MBA can also help in career change.

    @Shraddha: It’s extremely rare for graduates in India to be placed abroad without experience. It’ll be better if you work for a few years and gain the relevant skills and exposure that’ll help you in an international career. Consider studying abroad after that.

  4. Mohini says:

    Hello Sameer,

    I am International Business Management student and would like to know potential career opportunities in Private Banks in India.
    Please enlighten me for the same.

    Thank You

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