Friday, June 21, 2013

Slowdown scares executives away from IIMs

A two-year mid-career IIM MBA, once keenly desired for its ability to catapult careers, is now turning into a scary option as executives worry the persistent economic slowdown will ruin the job market. Only 219 executives with at least three years work experience have quit their jobs to sign up for such an MBA at six IIMs (Indian Institutes of Management) that ET spoke to for this story. Last year, 351 students had signed on for similar MBAs — that's a decline of 37% this year.

In percentage terms, 15% of all students enrolling into these six IIMs last year had at least three years of work experience. This has now declined to just 9%, data collated from IIMs at Ahmedabad, Bangalore, Calcutta, Indore, Lucknow and Kozhikode show.

"There is a risk associated with leaving a job (to pursue an MBA) in today's economic environment," says Prof. Ashutosh Sinha, Chairman of Admissions at IIM-Lucknow. Adds MJ Xavier, Director, IIM-Ranchi: "People don't want to leave their jobs because of the current economic scenario. The demand for two-year programmes will go down."

Industry sources say companies have shown a preference to hire freshers as they are less expensive and can be moulded the way the companies want. "People are becoming more discerning," says K Ramkumar, Executive Director, ICICI Bank, "When a company hires a person with 3-4-5 years experience there could be an expectation mismatch if the quality of experience is not relevant. There could be fitment or salary issues if the person's experience is not relevant. But freshers, or those with 2-3 years experience, could be easily moulded by an organisation."

This is the first year that the top three IIMs — A, B and C — are witnessing such a decline. This number has been sliding at IIM-Lucknow, Indore, and Kozhikode over the past two years with the proportion of experienced executives signing up for MBAs dropping down to low single digits. The percentage at IIM-Indore, for example, was 44% in 2012 but is down to 5% for the batch starting in 2014. "Professionals are weighing the pros and cons of leaving a job before opting for an MBA.

There are several factors they consider like the chances of getting a better job profile and higher pay which in the current market situation could be risky," says a placement cell member from one of the IIMs. Also, corporate requirements have evolved. "Earlier, they used to hire more people at senior and executive levels from IIMs and hence preferred people with higher work experience," says Sinha from IIM-Lucknow.

"Needs have now changed with more people are required at relatively junior levels in most organisations. Companies obviously find fresh talent more suitable for such roles." Institutes are now also offering one-year 'Executive MBA' programmes. This is also contributing to the decline. "Executive MBAs is another dimension. Executives can save one year," says Prof. SSS Kumar from IIM-Kozhikode.

Source: The Economic Times, June 21, 2013

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