April 27, 2016

India’s 7% Problem

India’s Associated Chambers of Commerce and Industry (Assocham) is sounding the alarm. It’s never been a secret that the vast majority of India’s business schools are, um, ineffective at producing employable graduates. But, as the Business Standard newspaper reported today, Assocham is now claiming that India’s “unfolding B-school disaster” (Assocham’s words) is actually getting worse.

How bad is it? This bad:

  • Only 7% of Indian MBAs—excepting the high-quality grads of the top 20 IIMs and schools such as Indian School of Business—have the skills to be hired by Indian employers. As a result, they earn (again, setting aside IIM MBAs etc.) on average less than 10,000 rupees a month (that’s US$1,808 per year). And that’s only the MBAs that are employed; many aren’t.
  • India has 5,500 government approved business schools today and many more that are unapproved. Between 2008 and 2012 alone, the total number of Indian management schools doubled, according to All India Council for Technical Education. And the number of MBA seats has tripled to 520,000, up from 360,000 in 2011-12. And these numbers are after the shutdown of 220 Indian business schools since 2013.
  • These students pay management schools between US$4,520 and $7,534 for their “educations”—in a country whose average per capita income was US$1,498 inn 2013. But when these management schools aren’t scams they offer only “lack of quality control and infrastructure, low-paying jobs through campus placement and poor faculty,” according to the report by Assocham’s Education Committee.
  • The students themselves are not completely blameless, Assocham claims. “Most of the fresh graduates are afraid of getting their hands dirty” through hands-on training, but then, even if they wanted it, India’s lower-tier management schools provide only “negligible” real-world exposure/experience.

Sound depressing? Assocham agrees: “The quality of higher education in India across disciplines is poor; … the entire eco-system needs to be revamped.” Have a nice day.