Slowdown bites: Spend Rs 9 lakh on an MBA, earn only Rs 4 lakh

Not long ago, the ultimate ambition for any bright kid used to beengineering and medicine. When, in orderto cash in on the demand,engineering and medical colleges sprang up in every nook and corner, those who graduated from these found their equity significantly eroding due to the increased supply. Then came MBA to their rescue.

Any professional course got a higher acceptability if you had an MBA certificate too. And, there is a swarm of colleges offering business-related courses, resulting in an increased supply of MBA grads. The economic slowdown has only aggravated the glut situation.

The end result? Today, MBA degree is no longer a guarantee for a successful career. One reason for this is that most B-schools except the creme de la creme suffer from a paucity of qualified faculty and research and have a curriculum that is mostly theoretical.

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A recent paper on ‘b-schools and Engineering colleges shut down- Big Business Struggles’by industry body Assocham said only 10 percent of India’s MBA grads are employable. The paper also revealed that recruitments at the campus have gone down by 40 percent in the year of 2012.

[caption id=“attachment_981753” align=“alignleft” width=“380”] Reuters[/caption]

As a result the B-schools and engineering colleges are not able to attract students. Due to this more than 180 B-schools closed down in 2012 in major cities of Delhi-NCR, Mumbai, Bangalore, Ahmedabad, Kolkata, Lucknow, Dehradun, while another 160 are struggling for their survivals.

A report in today’s Economic Times points out that almost two-thirds of the graduates from B schools are struggling to find meaningful employment. While a majority end up spending anything between Rs 5-9 lakh on an MBA course, the starting salaries are in the range of Rs 3-4 lakh only, with Tier II B-schools managing to place only 30-40 percent of the students at just Rs 12,000-18,000 a month.

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According to the report, several surveys suggest there is an enormous gap between the top MBA colleges in the country and the tier-2, tier-3 and tier-4 colleges in terms of access to research, quality of faculty and their linkages with business and industry.

The slowdown has only made placements tougher. Since several corporates are nowcutting down on their training budgets, they are looking for people who can deliver from Day One, i.e. with experience. Apart from the top B-schools most of the graduates are raw talent without any practical hands-on experience.

In the last five years alone, the number of B-schools in India tripled to about 4,500 amounting to as many as 3,60,000 MBA seats, collectively. But the demand is waning now as economy growth rate hit its slowest in the last nine years and the quality of education provided by B-schools came under the radar.

The dearth of quality jobs is being felt in other fields too. Recently, another Economic Times report had saidover one million engineers are jobless in the country as of July 2013.

Frustrated engineers and business grads are now taking jobs for which they are overqualified and, therefore, underpaid.

This is a worrying trend since this could derail the value of education that was empowering the masses over the last decade.