As you approach a certain venerable management institution in the heart of the financial capital of India, the excitement of free enterprise is hard to miss. Roadside vendors, bordering the campus wall, sell exotic fast food (a Schezuan Paneer Dosa costs Rs 85!). At the nearby roadside teastall, future managers sit smoking with the accompanying cutting-chai in hand. A recent briefing by the placement committee on the market scenario this year forms the topic of heated discussions as they probe the current perils of capitalism. The Batch of 2009 dominates the hubbub on the road discussing the fallout of the latest data regarding negative numbers of industrial output.The future of the batch is on tenterhooks given the macroeconomic outlook. Placement was always the talking point at this time of the year, but the situation has changed. Students no longer worry about the pay-packages being offered, but whether the loyal campus recruiter will appear with a mandate to recruit.
When Lehman Brothers, every potential investment banker’s target company, fell in mid-September, few acknowledged the gravity of the situation at hand. Doomsday had struck the financial sector but other management functions like marketing remained optimistic. While the financial sector contributes 30 to 40 per cent of a good Bschool’s placements last year, the affiliate IT/ITES sector, reeling under the subprime effect with a huge BFSI footprint, contributes to another 20 to 30 per cent. In the past, they ensured that most in a batch would be comfortably placed. In the current scenario, this cushion has been taken away.
Placement figures have long driven the nation’s top talent to the best B-schools in the country. Every new batch which joined a B-school would land with dollar and rupee dreams. The rising starting salaries at Ivy League schools fed these dreams, as the average salary rose by 20 to 30 per cent every year at the top B-schools. Private B-schools fuelled them by increasing their batch sizes by 25 per cent or more. Many left their well-cushioned jobs to appear for management entrance examinations. No matter where you came from in a good B-school, you were assured of where you were headed. This winter, some hopes are likely to crash-land.Company HR departments, too, have not been ignorant of these times. Perhaps it is the right time for them to rationalise costs. Hiring and employee retention costs had reached a high. HR personnel struggled to recover the investment on every employee. The recent liquidity crunch has forced them to probe their staffing strategy. With cash flows uncertain, they now look at reducing hiring and staffing costs this quarter. Trimming the organisation and hiring at a lower cost are the two options they choose from. In campuses across the country, the drying-up of pre-placement offers (PPOs) was one of the first indicators of a situation like this.
Companies took time to award students who had performed exceptionally during their summer internship with a PPO. Some have chosen to take only this route to campus hiring this season.
As HRs delay their campus visits for pre-placement talks, the Batch of 2009 is evaluating options. The omens do not appear good and placement committees are postponing the glamorous Day-1 if they can. This year might cease to be a story of 100 per cent placements within hours, as companies and B-schools negotiate hard and demand an inch more in their favour.
So, is all lost at Ground Zero? As the winter unfolds, the current adversity is bringing in a new audacity of hope. Future managers are now sure of what sectors and profiles they want. They are evaluating their options, dawdle exercising them, often in favour of challenging profiles rather than pay-cheques. While the entrepreneurial bug is yet to catch on, most are revisiting the drawing board to see what permutation and combination of profile, package and location would deliver the best return to the decision of investing in their careers.
What all stakeholders—B-schools, students and corporates—are sure of is the fact that it is going to be a long winter ahead.