Anand Desai was working with Tata Consultancy Services in Bangalore when he thought about enrolling in a management programme. He applied for Common Admission Test and Graduate Management Admission Test. His first preference was Hyderabad-based Indian School of Business (ISB) but he got the option of only the five new Indian Institutes of Management or IIMs. He was not very excited about this.
Till a decade ago, IIMs were the most sought-after B-schools. In 2009, things began to change with the opening of several new IIMs, starting with IIM-Rohtak, and followed by more, in Ranchi, Raipur, Trichy, Kashipur, Udaipur, Nagpur and six other cities. While this means that the aspirants have a greater chance of getting admission, the value of brand IIM has been eroded in the process. The new IIMs have not been able to match the standards of the older ones on several parameters, including the quality of faculty/students, infrastructure, as well as ability to attract top recruiters.
Desai opted for IIM-Udaipur as he found it the best among the new ones in terms of global exposure and focus on entrepreneurship. He says the new IIMs are not attracting quality recruiters. At the time of placement, Desai opted out and later started his logistics venture, Tempawala.com. "With so many IIMs competing for placements, it has become a fish market. The same set of recruiters is being pitched by all IIMs," he says.
Recruiters' Dilemma: Apart from quality education and research work of students and faculty, the older IIMs had been valued mainly for the high-paying jobs their students got. This led to high expectations from the newer IIMs too. The reality has turned out to be different.
Typically, companies hire management graduates for two roles - strategic and functional. Most students from the top three IIMs - IIM-A, B & C - get strategic roles, considered a notch above functional roles such as sales, marketing, supply chain, operations and customer service. High-paying jobs in financial services, including investment banking, hedge funds and private equity firms, too, are mostly bagged by students from these top three IIMs. People in strategic roles are typically paid more, and that's where the new IIMs have not been able to make a mark. Hitesh Oberoi, MD and CEO of Info Edge, an internet company with properties such as naukri.com and 99acres.com, says they require product and marketing managers. "Our job gets done by going to the top three IIMs where we pay Rs 15-18 lakh per annum. For other jobs, we go to Tier-II and Tier-III institutes where we pay around Rs 3.5 lakh per annum. If I were to go to the new IIMs, I suppose I would have to pay Rs 8-10 lakh per annum. We don't have such requirements," he says. In some ways, the new IIMs have created a space between the older IIMs and lower-rung B-schools.
The situation is similar in Mahindra & Mahindra, or M&M, which hires from top 12 B-schools for group-level requirements and goes to lower-rung institutes such as Balaji Institute of Modern Management (Pune) and KIIT School of Management (Bhubaneswar) for other requirements. "Expectations of students at these institutes are realistic, unlike those of students from the new IIMs who compare themselves with students of the older IIMs. The quality of students passing out of the new IIMs is nowhere close to that from the top IIMs. We find issues with their ability to communicate, think strategically, and apply concepts in real-life situations. We just keep contact with these new institutes," says Prince Augustin, EVP (Group Human Capital and Leadership Development), M&M.
"They compare themselves with IIM-A, B, and C students, which causes dissatisfaction. Instead of IIMs, these institutes should have been called regional management schools," he says. M&M hires some 35 students each year from the top 12 B-schools and over 70 from Tier-II and III management colleges.
Some recruiters, however, say the new IIMs are expected to fill a gap. Maruti Suzuki Chairman R.C. Bhargava says there's now a much larger availability of good MBA graduates. "When there are fewer MBAs, they prefer joining consultancy and financial services firms. Few want to come to the manufacturing sector. The graduates from the new IIMs have to look beyond the traditional preferences," he says. In 2008, a committee headed by Bhargava had submitted a report to the HRD ministry on the governance structure of IIMs.
Apples & Oranges: The new IIMs say it is unfair to compare them to the older ones. They say their growth has been much faster. Gautam Sinha, Director, IIM Kashipur, says it took the older IIMs 50 years to have 500 seats for their flagship programme - the post-graduate programme, or PGP, in management. "They had 120-130 seats for years. Look at the new IIMs. They are already nudging towards 200 seats," he says. IIM Kashipur has 34 full-time faculty members. The visiting faculty numbers over 45. With strength of 310 (for PGP), the faculty-student ratio is 1:9, slightly lower than the 1:10 stipulated by the HRD ministry.
IIM Ranchi, established in 2010, says scaling up class and faculty strength is a challenge due of shortage of infrastructure. At present, IIM Ranchi doesn't have its own campus and is operating out of two floors of the Jharkhand government's Suchana Bhawan. It started with 44 students six years ago. It has 120 students in the PGDBM course and another 50 in the PGDHRM programme. It has been allotted a 60-acre plot. But the construction work has hit a hurdle. Anindaya Sen, director, says they are facing protests from local residents at the construction site. The institute plans to rent more space within the two-three km distance of the existing campus to shift some administrative staff there and increase the student intake in the PGDBM course to 180-240. "The number of faculty members sanctioned is dependent on the number of students. We have 17 faculty members. The institute has permission to hire additional staff,"says Sen.
Started in 2009, IIM Rohtak is facing a similar problem. "Our campus is being built. We will move academics to the new campus next year. We faced delays in getting land and environmental clearances from the state government. We will grow much faster when we move to the new campus," says Atanu Rakshit, Director, IIM Rohtak.
Faculty Shortage: Though faculty shortage is affecting almost every B-school, the situation is worse in the new IIMs, partly due to their location. The fact that the new IIMs were opened in a span of just six years has made matters worse. "If the institute is not in a good location, it will always find it difficult to find faculty," says Ajit Rangnekar, former dean, ISB. "As such the salaries of IIM professors are low compared to, say, what ISB and institutes in Singapore pay. The institute has to take care of everything - water, electricity, security, family, and remuneration, in order to attract faculty," he says.
IIM Kashipur's Sinha says the quality of faculty is their biggest concern. "I advertised for 15 seats. I got 900 applications. Half were not even worth toilet paper. Finally, we hired six people. Hiring is always open," he says.
In order to compensate for low salaries, the new IIMs, just like the older ones, are helping faculty members earn in other ways. Many have started short-term courses for professionals to generate revenues. Also, the faculty can write for international journals and do consulting work for companies. The HRD ministry will support these institutes financially for just seven years. After that, it will give money only for physical infrastructure. "Building a sufficient corpus is challenging. PGPs don't make money for IIMs," says Sinha, adding, "having good faculty is more important in case of supplementary courses; a professionals spending Rs 25,000 for a three-day MDP course wants maximum bang for the buck."
The stiff competition is also prompting the new IIMs to find niches. IIM Rohtak and Udaipur, for instance, are focusing on entrepreneurship, whereas IIM Kashipur is laying emphasis on industry connect.
Experts say that changing the mindset of recruiters and students is a long process. It will take years to build the legacy that the older IIMs have.
(Additional reporting by Dipak Mondal and Chanchal Pal Chauhan)