Salaries are down by 25%, international offers have dried up, and at some top business schools nearly half the graduates can't find jobs
Students at Indian business schools are having just as hard a time as their American counterparts landing jobs after graduation, and they are facing one of the most painful recruiting seasons in years, according to a new report.
The job placement figures this year at nearly a dozen of India's top management schools—including four Indian Institute of Management campuses (IIMs)—are more dire than expected, according to the highlights of the 2009 MBA Placement Report, released on Apr. 22 by MBA Universe, an India-based Web site about business schools.
It's a sharp reversal from last spring, when Indian B-school students had what was their best recruiting season ever. This year the average salary across top tier B-schools is down 25%, wiping out the record 20%-to-22% salary gains students made last year.
A. Kumar, the site's editor, said the global financial crisis is having a serious impact on the morale of Indian students.
"Students who saw MBA admissions as the ticket to good jobs have started questioning the return on investment, perhaps for the first time in several decades," Kumar said in an e-mail.
The news comes at a time when many students from India are opting to study at business schools in their home country, rather than to go abroad to a U.S. or European school, as many have done in the past. Admissions officers at top U.S. B-schools report applications from Indians are down this year, with many worried about obtaining student loans and H1-B visas, as well as the strict hiring restrictions on any companies receiving federal bailout funds under the Troubled Assets Relief Program. Meanwhile, the growing reputation of top-tier Indian business schools like the IIMs is making them a viable option for Indians who otherwise might have chosen to shell out $100,000 or more for a brand-name U.S. degree.
But Indian students opting to stay at home will face significant challenges ahead, especially when it comes to landing a job. At many business schools, career placement officers anticipate the hiring season will continue long after graduation, extending into the summer and perhaps beyond.
Even top-tier schools like the Indian School of Business in Hyderabad have extended their job placement season indefinitely because only 57% of students have found jobs, according to an Apr. 2 report in the Business Standard, one of India's leading business newspapers. The school has not yet released its official placement numbers, according to the MBA Universe report. A spokeswoman from the Indian School of Business did not return several e-mails seeking comment about placement results.
Complicating matters, "the picture is dull" for students looking to land jobs outside of India, according to the report. The best international offer at any of the IIMs came from the Indian Institute of Management Calcutta, where the highest salary topped out at $86,785. At the Indian Institute of Management Ahmedabad, the highest international offer was $83,000, down from last year's peak of $280,000 to $360,000. Meanwhile, schools outside the top 20 are facing an even harder time placing students, Kumar said.
"The second- and third-tier schools will see a constant struggle until the economy revives," he said.
Abhishek Nagaraj, 22, a first-year student at IIM Calcutta who is interning at an investment bank in Mumbai, is spending his summer working as an intern at a financial firm. Among his classmates, there is "this perception that we are at the bottom right now," he said, referring to the economy.
"The numbers are definitely down, especially at the top three IIMs," Nagaraj said. "Last year, each of the banks would take more than 10 students, but this year it was the low single digits."
With fewer financial firms and consulting groups hiring, students are turning to other sectors for jobs, most notably government-owned corporations known as public-sector undertakings. Students are accepting positions in the oil and energy, insurance, and telecom sectors at companies such as Bank of Baroda (BKBAF.PK), Steel Authority of India Limited (LAUF), and Bharat Heavy Electricals ( BHHEF.PK). Hiring in this area accounts for 15% of all offers this year, up from just 5% last year, the report says.
"Since this sector is growing, they can afford top MBAs at a price that suits their budgets," Kumar said.
At the International Management Institute in New Delhi, the country's first corporate-sponsored business school, career placement officers are trying to find jobs for all 155 students in time for the mid-May graduation ceremony. The recruiting season suffered because many multinational corporations did not participate in recruiting this year, said Amrish Sharma, the school's manager of corporation relations, in an e-mail. Those that did participate were "prudent" when it came to making offers, hiring on average 1.5 students, as opposed to the four they would have taken last year, Sharma said. Many chose to hire only summer interns and did not come to campus this fall for regular recruitment.
Only about two-thirds of the class has found jobs so far, but the career office is optimistic the school will be successful in helping students find employment, he said.
"We're going to keep trying until the last student is placed," he said.