Three titans. Three different paths to the top. Tata Sons Chairman N. Chandrasekaran, who holds a Masters in Computer Application (MCA), never went to a B-school. World Bank Group President Ajay Banga is one of the most illustrious alumni to walk out of IIM Ahmedabad (IIMA). And Indira Nooyi topped up her IIM Calcutta (IIMC) MBA with a Masters in Management from Yale before landing her career-defining role at PepsiCo. “A good leader comes in so many shapes and sizes that the leader at the top could come from any background,” says SPJIMR Dean Varun Nagaraj. In fact, XLRI Jamshedpur Director Fr S. George says the presence of an MBA does not always guarantee superior leadership or company performance. “Entrepreneurial CEOs such as Bill Gates and Steve Jobs have demonstrated that the lack of an MBA degree does not hinder success,” he says. “Many CEOs have reached their current positions by either starting their own companies or climbing the ladder without an MBA.”

He may be on to something. Consider this snapshot of corporate zeitgeist. Research by Business Today shows that more than 60 per cent of the executive heads (Chairpersons or Managing Directors or CEOs) of the current Top 50 Indian companies by market capitalisation do not have a management degree. A lot of them are engineers and CAs. But, intriguingly, of 29 top global CEOs of Indian origin that BT looked at, most acquired an international MBA degree before attaining worldwide prominence. And not one of them has done an MBA from India. “In India, CEOs at the top today have risen up the corporate ladder having largely worked in an era of limited resources and licence raj when jugaad [innovation] was the way of doing business and achieving success,” says Ramabhadran Thirumalai, Deputy Dean–Academic Programmes at ISB.

Accreditation is not an affair to be taken lightly. It involves some investment of time, money, resources, etc.

Rishikesha T. Krishnan
Director
IIM Bangalore

“Our B-schools are 50 years old. Theirs are 100-150 years old. [In India] you will find a lot of MBA holders in COO/CFO/CMO or [country manager] positions,” says Suresh K. Jakhar, Chairperson, PGP, and Associate Professor at IIM Lucknow (IIML). “A level below (the CEO) at C-1 is where structure plays a role, and management discipline is required more so. That’s probably why you’re seeing MBAs in those roles,” says Nagaraj, adding that it’s more a reflection of leadership at the highest level involving far too many variables.

There are many more ways to argue in favour of Indian schools. India has many family businesses with their own internal training systems. The IIT-IIM managers have favoured tech-oriented companies, while the Top 50 companies are a mix of PSUs, family businesses, traditional sectors and tech companies. Or that it is simply harder to get into an IIM than an international programme. As India gets assimilated in the global way of doing business, and as the C-1 level leaders ascend, a lot of Indian MBAs will become CEOs, say the top academics.

Admittedly, the track record of Indian B-schools in seeding top CEOs is not worth crowing about. And while the IIMs, ISBs and a handful of other institutes can still claim to be centres of excellence with several notable alumni in their rosters, the same cannot be said for a majority of India’s 3,000+ B-schools, which fall short of being aspirational for both students and recruiters. And even for the IIMs et al, their lacklustre global rankings paint a sobering reality. For instance, the QS World University Rankings–Full Time MBA: Global 2023 of Top 100 colleges has only four Indian B-schools—IIMA (44), IIM Bangalore (IIMB, 50), IIMC (68) and ISB Hyderabad and Mohali (78). And the Financial Times Global MBA Ranking 2023 which lists the world’s Top 100 MBA programmes has just ISB (39), IIMA (51), IIMB (52), IIMC (76), IIM Indore (IIMI, 89) and IIM Lucknow (IIML, 90).

This raises the question—why do Indian B-schools struggle to meet global standards? This is especially pertinent at a time when economic power shifts to Asia and China is viewed with suspicion, giving India an opportunity to become a management hub in this part of the world.

Vying For the Crown

The first step towards an international ranking is to jump on to the accreditation bandwagon, say the colleges. The Triple Crown in management education refers to business schools certified by three major bodies: The Association to Advance Collegiate Schools of Business (AACSB), the Association of MBAs (AMBA), and EFMD Quality Improvement System (EQUIS). And getting them is a pitted process. “Accreditation is not an affair to be taken lightly. It involves some investment of time, money, resources, etc., and the agencies will not give you accreditation that easily. It takes several years and sometimes multiple attempts to get accredited,” says IIMB Director Rishikesha T. Krishnan.

Only 24 participants of BT’s ranking of two-year programmes in India have at least one international accreditation. Within these, only IIMC and IIMI are triple-crown holders (as is ISB, which tops BT’s new ranking for one-year MBAs). Eighteen institutes have AACSE, 11 have AMBA and only four have EQUIS—IIMC, IIMI, IIMA, and IIMB (IIM Kozhikode, which did not participate in BT’s ranking, also has EQUIS accreditation).

A good leader comes in so many shapes and sizes that the leader at the top could come from any background

Varun Nagaraj
Dean
S.P. Jain Institute of Management & Research

The schools point out that some of the consideration criteria such as internationalisation, research output in international publications, and carbon footprint & sustainability are inherently disadvantageous for India. “These rankings are based on certain parameters which we don’t want to fulfil because we don’t want to lose our character. Diversity in inter-country students is one of the parameters in those rankings. We have 95-98 per cent Indians,” says IIMA Director Bharat Bhasker.

EQUIS, particularly, requires the schools to attract international students. The definition of international has hurt Asian schools a fair bit, say heads of institutes. “A minor school in Luxembourg will get ranked higher because it is no big deal for someone from Spain or Germany to go there. It’s a totally unfair way of defining what ‘international’ means,” says Nagaraj. Besides, salaries of students and faculty in India will be lower than what a European economy offers, even if considered at purchasing power parity, the SPJIMR Dean adds.

Sangeeta Shah Bhardwaj, Acting Director of MDI Gurgaon, says that large B-schools with a good corpus, processes, and batch size can show their performance required to attain global ranking, while smaller B-schools possibly find it harder. “When smaller standalone and privately funded B-schools are struggling to survive, they, unfortunately, cannot focus on the aspects that international agencies are looking at”. Further, she adds that MDI Gurgaon plans to go in for EQUIS Accreditation this year.

Attracting international candidates is a big roadblock, admit the schools. Nagaraj even says it’s a dream we should give up on. “We should just recognise humbly that the type of student we want has many good choices. If faced with a choice between a top B-school in India and, say, a Carnegie Mellon, they would pick the latter.” Plus, Indian B-school placements are India-focussed, but an international student may not be interested in working in India, says IIMB’s Krishnan, but adds that IIMB is keen to bring in more foreign students through a scholarship programme, which its Board has recently approved.

Several schools are also facilitating international student and faculty exchange programmes to globalise the experience. For instance, Bhardwaj says MDI Gurgaon’s two-year MBA with International Business (IB) specialisation, where a student studies one year in India and the other in ESCP Business School in Paris, has had a lot of traction. “Almost all of the 120 students successfully completed their paid internships in Europe. Further, five-six of our faculty went on a one to two-week teaching assignment to European universities, and in exchange faculty from [some] European universities came to MDI Gurgaon to teach.” XLRI hosted 10 foreign students from three B-schools for one term of study in the academic year 2022-23. In exchange, they sent 29 XLRI students to nine business schools across five countries. “We are also focussing more on research professors and international visiting faculty,” says George.

India’s severe climes also play spoilsport, says IIML’s Jakhar: “We have collaborations with a lot of European B-schools. Except for the December-March term, the students find the weather too harsh to stay here.” Manish Gupta, Consulting Head at consulting firm MBA Crystal Ball, points out that India is not yet considered as a global management education hub. “Compare the number of Indians studying and settling abroad versus people from the US or UK wanting to do the same in India. Unless the perception shift happens, Indian B-schools cannot do much about the diversity quotient beyond a point.” 

Many CEOs have reached their current positions by either starting their own firms or climbing the ladder without an MBA

Fr S. George
Director
XLRI Jamshedpur

Diversity Roadblocks

Accreditation or not, the pedagogy of top Indian B-schools is no less, insist the colleges. But even they admit that international schools take the cake when it comes to class diversity. “In B-schools, 50 per cent learning comes from professors and the rest from your batchmates. Culture and business are strongly correlated. When you have classmates from various cultures, you learn more,” says IIML’s Jakhar.

The average Indian MBA class is overwhelmingly Indian male engineer, shows BT-MDRA data, at least among the Top 25 B-schools in India. The numbers steadily improve in the colleges ranked lower in BT’s ranking. In fact, the ratio flips in favour of non-engineers and an almost 50-50 male-female gender ratio in the colleges ranked 76-100. It is perhaps an indication of quantitative bias in the CAT (Common Admission Test, the entrance test for MBA colleges in India), which makes it easier for engineers to crack the exam and pick higher-ranked colleges.

SPJIMR’s Nagaraj says they are consciously trying to build candidate diversity at the admission stage, within the parameters of a transparent process. Indeed, the share of engineers has steadily declined since 2015 among the Top 25 schools, shows BT-MDRA data. “But it’s nothing compared to what they have in the US, not close at all,” says Nagaraj, adding that it could possibly improve as more students graduate from liberal arts schools such as Krea University and Ashoka University. MBA Crystal Ball’s Gupta says the Indian two-year programme is less valuable abroad because of this class homogeneity of educational background, nationality and gender. “If there is no dissent, individual thinking within the group doesn’t get pushed up.”

This diversity, and the opening up of a global career path, are among the biggest allures for students to pursue an international MBA even though it doesn’t come cheap. As many as 26,000 Indian students went to the US for business and management programmes in the 2021-22 academic year, as per data from US State Department-funded initiative ‘Open Doors 2022’. One may have to shell out Rs 1-1.5 crore for an MBA in the US or Europe, depending on the school and course duration. An IIM MBA, on the other hand, costs around Rs 20-25 lakh, while other GMAT-based MBAs in India like the ones offered by ISB in Hyderabad and Mohali could cost Rs 30-40 lakh. “Purely from an immediate financial burden perspective, the Indian MBA might have an edge over global MBAs. But the trajectory you can achieve with an international MBA is very rare to achieve with an Indian MBA,” says Gupta.

IIML’s Jakhar agrees that finding positions abroad becomes easier when you have a network of international peers. But all top global consulting firms also recruit from the IIMs, apart from a recent interest from Middle-Eastern firms as well, he adds. If one does well, one can move internally from an India office to, say, a New York office of one of the top consulting firms even without an international credential, adds Nagaraj. “The key thing is, MNCs place Indian MBAs at the level they would hire US undergrads because they treat the Indian MBA as a finishing school added on to the three-four-year degree.”

When smaller B-schools are struggling, they can’t focus on the aspects that international agencies are looking at

Sangeeta Shah Bhardwaj
Acting Director
MDI Gurgaon

Intellectual Capital

Another crucial reason why Indian institutes are not world-class yet is the lack of investment in faculty, say experts. Mumbai-based MBA consultant Jatin Bhandari’s firm PythaGURUS Education coaches more than 100 students every year to get into top B-schools in India and abroad. An alumnus of Darden School of Business, University of Virginia, he speaks of how General Electric’s then CEO Jeff Immelt showed up in Darden’s class one day to take a 45-minute session on why the company sold NBCUniversal to Comcast. “How many gods of Wall Street will show up at your class and teach you here?” He says Indian schools don’t have the kind of money to retain, say, a Dipak Jain. The Indian-origin former dean of INSEAD and Kellogg School of Management is now the Co-President and Global Advisor of China Europe International Business School. “Why will he want to teach at a Rs 60 lakh per annum salary when his students are making crores?” poses Bhandari.

MDI’s Bhardwaj says there isn’t enough investment in the “intellectual capital” of faculty members. “Research is not revenue generating. So, many B-Schools do not suitably incentivise the faculty to do cutting-edge research.” Adds Thirumalai of ISB: “In the last decade or so, the Chinese have pumped in a lot of money into their education institutions without worrying about ROI. The results are there for all to see. They are attracting some of the best faculty in the world and have seen huge improvements in their overall quality.” But attracting international faculty also raises the question of pay differential between Indian and foreign faculty members, says IIMB ’s Krishnan. “Our existing faculty are as good as the best anywhere in the world. There’s no reason why they should be paid lesser than anybody else… We have to come up with equitable pay structures that allow us to attract people internationally, but also compensate our local faculty,” he says.

Bringing in the Moolah

Better quality requires more money. Business schools of excellence, experts say, cannot be run on profit models and require endowments to be pumped in without worry of ROI. Storied global institutions such as Harvard and Stanford were set up on endowments from successful business people and have raised billions of dollars through their alumni. Indians have also contributed to them. The Tata group has donated a cumulative $100 million (about Rs 820 crore at current exchange rates) to Harvard Business School and Cornell University in 2008-09 and 2015-16. Since 2008, the Stanford Reliance Dhirubhai MBA Fellowship Program supports five fellows annually with full tuition for the two-year programme, provided the fellows agree to return and work in India within two years of graduation.

The outreach required to get those kinds of funds is a challenge even for the best institutes in India. For instance, IIM Ahmedabad launched its Endowment Fund only in June 2020, making it the first Indian management institute to come up with the initiative. It had an initial commitment of Rs 100 crore by 10 alumni, with a target of growing the corpus to Rs 1,000 crore in five years.

It’s a far cry for the lesser known and upcoming standalone institutions. “We allow self-funded autonomous AICTE-approved schools to start, but the ecosystem lacks somewhere to enable growth and become a known B-school in the country,” says MDI’s Bhardwaj. ISB’s Thirumalai says top global institutions are thriving today because of successful businesspeople who realised the importance of education without worrying about ROI or what fame they would get during their lifetime. “In fact, it is very likely that they wouldn’t have known how famous these institutions would become in a few centuries. That is what needs to change in India.”

The recipe is there for the taking. Cooking the dish is quite another matter.