Most of the new IIMs are in states where industry exposure is less. Any business school needs the synergy of an enabling environment like proximity to business hubs, data sources and good connectivity
It is important to have a long-term road-map for management education. The government should consider conferring Institute of National Importance (INI) status to reputed and outstanding autonomous management institutes
By 2020, India will become the youngest country in the world. Every third person in India will be a youth. This shift in demographic trends is hugely in favour of the country and with a stable political government at the Centre, it is very much poised to reap the benefits of this dynamic transformation for economic success.
With the West, Japan and China ageing, the demographic potential (at least 64 per cent of the youth will be in the working population) will propel India’s GDP to unprecedented levels, according to the findings of the ‘State of the Urban Youth, India 2012: Employment, Livelihoods, Skills,’ a report published by IRIS Knowledge Foundation in collaboration with UN-HABITAT. These findings resonated the Census of India 2011 Report as well, which said that India will have the maximum number of working age population (between the ages of 15 and 59) in the world.
Keeping this in mind, the Narendra Modi-led government at the Centre put a lot of focus on education, skill development and creating more jobs in its maiden Union Budget in June 2014. India wants to impart skills to 500 million people by 2022. It is in this context that the government is pumping in more money into the higher education sector. The budgetary allocation for education increased by 12.3 per cent from last year, reaching to Rs 83,771 crore for 2014-15. Many of the objectives of the new government were spelt out in this year’s budget, chief among them being establishment of new IITs (Jammu, Chhattisgarh, Goa, Andhra Pradesh & Kerala), IIMs (Himachal Pradesh, Punjab, Bihar, Odisha & Maharashtra) and AIIMS (Andhra Pradesh, West Bengal, Vidarbha and Purvanchal) to boost capacity in such institutes of excellence at a total cost of Rs. 1000 crore.
For many years, the dream job was to become either a doctor or an engineer. While that sentiment had not changed, another was added to the pool – MBA. The shift to management education was slow, mainly led by the IIMs and has picked up only in the last decade or so. While 200,000 students appear for CAT every year (this number rises and ebbs), the number of seats in the Top 50 B-Schools in the country does not exceed 20,000.
While some appreciated the move to set up new IIMs, the jury is still out on whether this was the right move to raise the bar on management education in the country. For this story, we talked to educationists across the country to find out if setting up new IIMs in each state would hamper the growth of other B-Schools and lead to the dilution of the IIM brand.
Revisiting the IIM legacy
To understand the growth of management education in the country, one has to look at the growth of the Brand IIM. From two schools in 1960 to 13 in 2011, IIMs have come a long way in moulding the skills of the managers. The need for good quality management education in India was felt in the late 1950s when India was growing rapidly with the advent of numerous public sector enterprises. That led to the birth of IIM Calcutta and then IIM Ahmedabad. In 2007, the rising demand for management professionals led the then government to set up seven new IIMs taking the total number to 13. Since the 1960s, the population has grown three times and the number of states has doubled. This, coupled with increasing job opportunities in the market along with global aspirations of the people, seems to have justified the demand for setting up more IIMs.
However, there are simmering differences between the older and the newer IIMs. The newer IIMs are unhappy that the older counterparts are not treating them as equals and have major differences in resource, revenue and faculty management. When the seven new IIMs were set up, the older institutes were asked to mentor them. While IIM-A refused, IIM-L mentored IIM Rohtak and IIM Kashipur; IIM Indore mentored Raipur and IIM-B Trichy.
The scene does not appear to be any different today. The fight for faculty, resources and funds will only get more intense as the new IITs/IIMs are set up. The government’s view that they could act as a catalyst for economic development of the towns and regions is debateable as history does not show too many instances of where this has actually taken place.
Most of the new IIMs are in states where industry exposure would be at a minimum. Any business school needs the synergy of an enabling environment like proximity to business hubs, data sources and good connectivity. Another important aspect is having social infrastructure such as good schools, good healthcare and event platforms where students can engage with the industry. The B-Schools in remote locations clearly face significant challenges as management education is largely practice-oriented and is hard to teach in a vacuumed crucible.
The quality of education and the selection criteria has been a sacrosanct virtue of IIMs. Even now, IIMs remain amongst the toughest B-Schools to enter. The selectivity at IIMs is about 1.7 per cent (roughly 2 lakh apply and 3300+ are admitted). In comparison, Harvard selects around 8-10 per cent of its applicants. However, the quality of business management education delivered by IIMs has suffered in recent times because almost 50 per cent of students are admitted on considerations other than merit i.e. under special quotas reserved for SC, ST and OBCs, said Dr Amit Gupta, Chairman, JIMS. With fewer takers in the reservation category, IIM-A admitted ST students at a minimum percentile of as low as 38.34 per cent in 2013.
In the last decade, a number of private institutions have been clamouring for government support. The government could instead consider the option of supporting and incentivising top private sector schools by giving them greater autonomy coupled with a quality mandate.
E. Abraham, S.J., Director, XLRI, said, “It is important to have a long-term road-map for management education. The government should consider conferring Institute of National Importance (INI) status to reputed and outstanding autonomous management institutes. Today, new IIMs are extended all possible financial help by the government; likewise, reputed and outstanding autonomous management institutes should be given grants for expansion and setting up branches in other parts of the country as well.”
Making a case for autonomy, Prof. Sandhya Dhabe, Director, SIMSREE said, “With autonomy, the institutes will consequently get a chance to design their own syllabus, conduct their own entrance test. As a result, their admissions will not depend on MH-CET. They will also have the right to increase their fees and introduce new propositions. In this way, the existing business schools will have a chance to stand out and showcase their strengths. Otherwise, they will witness a dearth due to encroachment of IIMs in every state.”
War for Faculty
Currently, there is an acute shortage of quality faculty in the country. Only a negligible percentage of professionals consider teaching as a career choice and are active in scholarly research and practise-oriented thought leadership. Rather than launching new colleges, the need of the hour is to launch programs for education and training of faculty.
The government needs to incentivize good talent like it did when the first set of IIMs were established way back in 1960s. Either fellowship programs should be started in reputed institutes or people can be handpicked and sponsored for higher education. While the latter is not a long-term solution, it will solve the immediate crisis of a dearth of good quality faculty. In that context, it will be challenging for new B-schools in tier-II or –III towns to attract good faculty, even if they happen to be IIMs.
Dr. Bibek Banerjee, Director & Academic Mentor at IMT Ghaziabad, said, “Indian academia in management has a special problem – that it is often (and erroneously, of course) perceived as a ‘residual’ or a ‘retirement’ industry. Many believe that they can ‘come back to’ or ‘give back to’ academics whenever they want to. While that intent is a great starting point, the journey of a well-trained faculty really begins with a solid and rigorous doctoral education. And it is a fact that India does not produce the quantum of quality PhDs, FPMs or DBAs that would be required to support another half a dozen ‘quality’ institutions. That leaves us with hiring from the global market – where we can rightfully compete provided we have the right incentive structure and research culture. But there again, we are handicapped as we have to contend with remuneration levels that are among the lowest in the world.”
The recruiting community knows that a large part of the IIM value creation process begins with the talent screening part – wherein the best students choose the best schools. Today we do not know if the best students are necessarily choosing the newer IIMs. While speaking to a number of business schools, we found out that over the past couple of years the trend of students leaving top private schools for admission offers in newer IIMs has significantly reduced.
Prof. Pratima Sheorey, Director, Symbiosis Centre for Management and Human Resource Development (SCMHRD) says, “The increase in the number of IIMs will overall provide better reach to quality education. However, it will lead to some dilution in the IIM brand, as more does not necessarily mean better. The biggest advantage will be to the students who were earlier moving towards colleges other than IIMs. They now have an option to convert to IIMs. For other colleges in the mix, this will however lead to competition for the same pool of students and faculty across the board. Companies usually give new colleges a couple of years to settle down before they approach them for recruitments. In this case, recruiters are already talking about the older and newer IIMs. However, there are a number of small organizations who might tread the path to the new IIMs when they come about.”
No brand dilution
Dr Gautam Sinha, Director, Indian Institute of Management, Kashipur, says, “In my personal opinion, one IIT and one IIM in each state would be a good step. If the proposal for opening an AIIMS in each state is seen as extending good healthcare, why should opening of new IIMs be seen as diluting the brand? University of Southern California has seven campuses. The number of campuses or institutes under a brand is not the cause of brand dilution. If the entry criterion is lowered, the curriculum is irrelevant/out dated, if the outgoing students are not equipped with the relevant knowledge and skills—that would lead to brand dilution. I expect more institutes of technology (like IITs) and management (like IIMs) to grow in the years to come. I think more students will opt for the newer IIMs, probably at the cost of private institutes. However, those private institutes already at the top may not be affected.”
Prof. Rishikesha T. Krishnan, Director, Indian Institute of Management, Indore, said, “Looking at the IIM history, it has usually taken an institute 15 years to reach critical mass and to be seen at the same level as the others. The initiative here should be using our experience to shorten that time to maybe five to six years.”
Time to take a holistic view
Brand extensions, especially in education, are a risky proposition for premium brands as it is very difficult to sustain the same culture and quality across different institutions. The additional IIMs will lead to more competition for student acquisition and this will surely impact other colleges. There is great apprehension that proliferation of IIMs has already put pressure on the credibility and equity of this prestigious brand – and creation of a few more will further exacerbate that pressure. There are also a number of compounding problems, the largest being dearth of quality faculty, their retention and giving them salary and scale such that talented people consider education as a career option.
Looking at it from the point of view of the government, it is a great vote bank statement. It was part of the manifesto before the Narendra Modi government came to power and it has been rigorously pushed in its budget allocation. Fundamentally, the thought is in the right place but it will take time to mature and give the benefits envisaged. A holistic view of this initiative is required to ensure that it comes about as a turning point in business education. For now, this cake is only half baked.