Business Today

Who Needs an MBA, Anyway?

Graduates from reputed colleges, and not just b-schools, are being hired directly for managerial roles.
Arunima Mishra   Delhi     Print Edition: Oct 26, 2014
Ali Akbar, armed with an MBA (left), and non-MBA Raghuraman S. at the Godrej office
Equally good: Ali Akbar, armed with an MBA (left), and non-MBA Raghuraman S. at the Godrej office. Photo: Rachit Goswami

Raghuraman S., 27, Manager, Corporate HR Technology, Godrej Industries Ltd, joined the company in June 2008 right after getting his Bachelor's degree in electronics instrumentation from BITS Pilani's Goa campus. He was hired through the company's graduate recruitment programme as a graduate trainee. Ali Akbar, 23, also joined the same company as a management trainee in June this year after graduating in mechanical engineering from BITS Pilani and doing an MBA from NITIE, Mumbai.

Are Akbar's career prospects in the company brighter than Raghuraman's because he is an MBA? Not so. It all depends on how they perform in their roles. "The difference between MBAs and non-MBAs tends to even out in three years' time," says Sumit Mitra, Head, Group HR and Corporate Services, Godrej Industries and Associate Companies. Raghuraman too does not believe an MBA is essential. "If you get opportunities without having an MBA, the degree may not be required," he says. "I never got a feeling in the company that any opportunity would be denied to me because I did not have an MBA."

Apart from their intake from B-schools, quite a few corporate houses like Godrej have also begun recruiting from reputed graduate colleges in recent years. Recruiters at Lady Shri Ram College (LSR), Delhi, this year, for instance, included consulting firm McKinsey, KPMG, PricewaterhouseCoopers, and Bain Capability Center. "Many of the companies brought LSR alumni, who had joined them earlier, along to showcase how well they were doing," says Kanika K. Ahuja, Faculty Advisor, Placement Cell, LSR.

FULL COVERAGE:India's Best B-Schools 2014

The companies recruiting graduates directly come from diverse sectors, but the biggest employers are probably start-ups. Online restaurant guide Zomato, for instance, started in July 2008, made 115 offers at graduate colleges in 2013. "An MBA or even a Master's degree has never been our criteria for recruitment," says Upasana Nath, Chief Recruitment Officer, Zomato. She herself never went to B-school but had worked in multiple domains such as sales, strategy and international operations, after joining Zomato.

For the students who are thus chosen, it is indeed a lucky break as the expenditure on their education drops sharply. An MDRA survey shows the return on investment (RoI) for a student at IIM, Ahmedabad, for example - the ratio of average starting annual salary to the tuition fee paid to get the MBA degree - is 1.6.

In comparison, since fees are very modest in undergraduate colleges, a Shri Ram College of Commerce graduate who is absorbed directly by a company has an RoI of 8.3 while an LSR graduate in a similar position has an RoI of 10 (see Huge Saving). Some companies even give their graduate recruits the opportunity to pursue an MBA at a subsidised fee after they have put in a few years. Godrej Properties, for instance, has a tie-up with Symbiosis Institute of Management Studies, while EY has one with Indian School of Business.

Employers maintain there are some advantages in recruiting graduates. "Some employers claim plain graduates are better than MBAs as they are more willing to work hard and more adaptable," says Ahuja of LSR. Often MBAs know exactly what they want to do and are unwilling to settle for less. "Management trainees are not very flexible while graduate trainees are eager to take charge and look forward to challenging roles," says Milind Apte, Executive Vice President, HR, Godrej Properties.

Still, there is no questioning the relevance of B-schools. MBA programmes offer much that undergraduates never get to learn - in particular, specific skills that make for greater employability. Students at B-schools are also much more familiar with company functioning, having gone through internships at companies, taken part in live projects involving companies, listened to guest lectures from people in different industries, etc.

Shalini Pillay, Head of People, Performance and Culture, KPMG, sounds a note of warning for graduates. "There is a difference in the gamut of career opportunities available to quality students from Tier-1 B-schools and those from Tier-I graduate colleges," she says. "At best, the top-end of students in graduate colleges is in some way comparable to students at a certain level in top B-schools."

Even Godrej, which recruits a good number of graduates, makes a distinction between MBAs and non-MBAs. The former are called 'management trainees' and are made managers after a year of service while the latter are 'graduate trainees' and become managers only after three to four years based on performance. It subsidises non-MBAs seeking the MBA degree because, ultimately, as Apte himself puts it: "Graduate training won't take them too far."

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