Tuesday, July 05, 2011

Engineering, MBA seats go abegging

A quarter of the 1.5 million seats in the country's engineering colleges and 40% of the 350,000 seats in MBA institutes are estimated to go abegging this year, as the lure of the two courses wanes. The academic year usually begins in July-August across the country.

"Despite the huge education industry capacity created, industry is not finding the talent it needs while the existing capacity cannot produce the required talent. This year, we expect that 25% of all engineering seats across the country will lie vacant," says Amit Bansal, CEO, Purple Leaf, a Pearson Educomp joint venture which provides external coaching for engineering and MBA courses.

Students and parents, he points out, no longer see any return on investment after investing Rs. 500,000-700,000 for an MBA degree or nearly Rs. 400,000 for a four-year engineering degree. The estimate of vacant seats was based on figures published by the AICTE (All Indian Council for Technical Education) and universities where the company has a presence and then extrapolated to the rest of the country.

The unemployability issue of fresh engineering graduates was first highlighted in a Nasscom report of 2009. It was something everyone knew but had not articulated: only a quarter of the country's graduating engineers were employable. Engineering and management degrees are regarded as the fastest way to recover investments made by parents in their child's education.

However, like all best laid plans, this return on investment has gone awry. The slowdown in the global economy has hit sectors that have tended to employ the most engineers — IT and ITeS. "The return on investment will now take six to seven years instead of the two to three years that was anticipated. The same applies to an MBA degree holder," says Bansal.

A fresh engineering graduate lands a job that should ideally be filled by a diploma holder, so the wages are low. "We found that more than training, they needed professional education. The industry wants finance and accounts professionals to understand strategy, so they should be able to assimilate, analyse and communicate," says Vandana Saxena Poria, Managing Director, Get Through Guides or GTG, an angel investor-funded provider of training to accounting and finance.

Given the anticipated shortfall in admissions to engineering colleges, Bansal says there could be a shakeout, with colleges shutting down. "In Orissa, four colleges have already shut down since they did not get students. In Bangalore, an MBA college has closed down, and been replaced by a mall. In Andhra Pradesh, colleges are up for sale about 70 km from Hyderabad. Colleges are either shutting down, selling the land and buildings, or are being taken over by better managed institutes. This is happening mainly where the focus of the management is non-academic," says Bansal. For long-term sustainability, say Saxena Poria and Bansal , there is an urgent need for good faculty. Only then will the two courses see some of their sheen restored.

Source: The Economic Times, July 5, 2011
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