Thursday, April 12, 2012

IIMs shelve global expansion plans

After years of fighting with the government to go international, the Indian Institutes of Management (IIMs) may not spread their wings at all. The three IIMs — Ahmedabad, Bangalore and Calcutta — confirmed to Business Standard that the economics of having an international campus is not in their favour and the same may not happen in the near future.

The Ministry of Human Resource Development (MHRD), had in October 2009, allowed the IIMs to go international, but only as a collective brand. Some IIM directors, however, felt it would affect individual brand identity of their campuses, and had made known their fears to the MHRD, which then allowed them to go international with their individual brands.

“I am not in favour of splitting my faculty across 10 locations. We have been getting proposals from various state governments to set up campuses in their respective states, but at this juncture, we want to take the advantage of ‘everybody together’ and grow here. We will, however, do activities abroad,” said Pankaj Chandra, Director, IIM-Bangalore. Chandra's five-year term as IIM-Bangalore director comes to an end this November.

Chandra added that IIM-Bangalore has been doing strategic partnerships with six schools globally, and are involved in research on “deep activities”. “We are in executive education globally. We are doing international students and faculty visits and conferences together. Our strategy has been to embed ourselves more globally through this process which we find very enriching for us as well as our partners,” added Chandra.
According to its website, IIM-Bangalore has collaborated with 93 international institutions so far. About seven years ago, IIM-Bangalore was the first among the IIMs to think of an international footprint —Singapore. The idea of a campus in Singapore, however, was turned down by the then HRD minister Arjun Singh, who felt there was a need to meet domestic demand first.
Samir Barua, Director, IIM-Ahmedabad, had earlier said the institute has been hesitant on an international campus due to faculty shortage and concern on the quality of students. “We need a good faculty pool to launch a full-time management programme. We will also look at the cost structure and a local partner. We do not want to draw money out of our corpus to expand internationally,” said Barua.

Indian institutes with campuses abroad generally go for a two-cycle approach, which involves setting up operations through a rented place for two years and branching out to their own campuses in three years’ time. Barua, whose term also comes to an end this November, added that an overseas campus may not happen during his tenure. “The time is very short as far as I am concerned. I am not sure if it is possible to have an overseas campus in just seven months." Barua had earlier told Business Standard that the institute may look at its first overseas campus either in Dubai or Singapore on a rented premises. He had said that IIM-A's international ranking may help it get a foothold in the international market. IIM-A was ranked 11th position in the Financial Times ranking published this January.

At the IIM-Calcutta, a board member echoes similar views. He added that economics are not viable for the institute to think of a campus in the near future. “There is no specific plan in terms of opening a campus. There are many different ways IIM-Calcutta and international partners can collaborate. For instance, we have long distance programmes in the Middle East for which many people have signed up. We also have affiliations of about 43 different B-schools. I think this is good enough to have a virtual international presence,” the board member added.

A fundamental reason for the IIMs to junk their overseas plans is the shortage of funds, they say. While the IIMs did not disclose their respective corpus, they said they have been drawing resources from the same to meet any need on campus. IIMs are now looking at various means to raise funds by setting up a separate department to look at the same. IIMs are also trying to tap into their alumni pool. IIM-Calcutta and IIM-Ahmedabad have an estimated 10,000 alumni, while IIM-Bangalore has 8,000 alumni.

Today, the bulk of the money that IIMs generate is through the Management Development Programmes (MDPs) or executive education programmes they conduct. In absence of these, they would be running at a loss or just marginally breaking even.

Source: Business Standard, April 12, 2012

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