MBA losing out value, should you still do it?


MBA losing out value, should you still do it?

Based on a research performed on MBAs passing out from India as well as Tier-III cities like Udaipur, we would like to share some insights of that report. This article will let them know the market reality, their true potential, where they lack, and how to improve on their shortcomings.

 
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MBA losing out value, should you still do it?

Based on a research performed on MBAs passing out from India as well as Tier-III cities like Udaipur, we would like to share some insights of that report. This article will let them know the market reality, their true potential, where they lack, and how to improve on their shortcomings. 

MBA, a highly regarded post-graduation program in India is being pursued by large number of students. India produces second largest pool of these management graduates (next only to China). According to the Department of Higher Education of Govt. of India, in 2013 there were 3,764 Management institutes across India with 449,829 seats.

However, in 2009 there were only 1,516 Management institutes with 151,059 seats. In these last five years, number of management pass-outs has increased at an astonishing CAGR of 24%.

We have quantity but what about quality? According to Aspiring Minds (a research company), of all MBAs passing out in India only 21% are hireable (capable enough to be given a job). The situation is even more serious for Tier-III cities like Udaipur where hireability of MBAs is only 11%. Because of low hireability MBAs from Tier-III cities struggle to get employed.

More than 40% of MBAs specialize in Finance stream. It is shocking to see that hireability of MBAs in finance from Tier-III cities is less than 5%. It means that less than 5% MBA students specializing in finance in cities like Udaipur are capable of doing financial work.

Even the industry leaders are worried about the lack of knowledge and skills by fresh MBAs. Let’s see what they have to say:

■  “Labour skill-mismatch and shortage could adversely impact India’s economic growth and wage costs” – Crisil

■  “Shortage of skilled workforce is an identified problem area for quite some time now” – Prabir Jha, SVP & Chief HR Officer, Tata Motors Ltd.

■ “There is shortage of high-quality technical manpower. System is under stress to provide sufficient manpower equipped with required technical skills” – AICTE

■  “79% of the Companies are not satisfied by the quality of talent accessed” – HCI and Kelly OCG Report on Talent Supply chain

■   “A majority of India’s workforce consists of unskilled people”  Moody’s analytics

When we try to analyze the reasons for low hireability, we find that lack of practical knowledge and skills as being the key reason. What is taught in B-schools is very academic and general. With academic knowledge it’s very difficult for MBA professionals to crack interview and perform in corporate world.

As such, there is significant lack of practical skills in finance professionals due to which they are unemployable. 

On the other side, economy is growing and so is the job market. According to India skills 2015 report from Wheelbox, employment in sectors like BFSI, outsourced research (where finance professionals are hired) is expected to grow by 25% and 16.4% in 2015. Other sectors are also expected to witness good growth in employment.

It means there is lot of demand but people with knowledge and skills are not available. This scenario is expected to lead to a huge demand and supply gap of trained finance professionals. According to a research report by Wheelbox, there would be a demand-supply gap of 82-86% in core professions by 2020.

As such, students lacking skills will face lot of competition in job market but students with requisite knowledge and skill will be highly rewarded.

This calls for a very strong need for finance professionals to get practical industry oriented knowledge. Modi govt. has already realized this and they are coming with a new ministry for skill development. They are also planning to tie up with countries like Australia, Germany and US for skill development.

In Udaipur, 900-1,200 regular MBAs and 400-600 correspondence MBAs pass out every year. If this pool is not hireable, then the condition is very serious and should be addressed immediately.

Considering the scenario, if someone intends to do MBA he should consider doing it from top 15 MBA colleges of India. Below top 15 colleges of India, the value of MBA falls drastically. Its not like MBA from low rated colleges won’t get jobs.

Almost everyone gets a job sooner or later, but what matters is the quality of job and salary drawn. MBA students from low rated colleges are getting jobs which an BCOM or MCOM student can easily do it. So one should do a thorough analysis before opting for career option like MBA.

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