Indian MBA Applicants Heading West

In recent years, an increasing number of Indian nationals are heading to foreign shores to pursue MBA programs. TopMBA.com investigates. 

A manager in a Delhi-based knowledge process outsourcing firm, Aniket Sharma is keen on enrolling for an MBA program at an American university. He has short listed several institutions and is preparing to take the Graduate Management Admission Test (GMAT) later this year.

In Kolkata, Rinita Chatterjee is trying to decide on a suitable business school in the United Kingdom. A middle level manager in a software company, Chatterjee wants to revamp her resume and move up the corporate ladder by investing in an international MBA.

MBA India

Statistics provided by QS suggest that the market is opening up for Indian MBA students in a big way.

According to research conducted by the Graduate Management Admission Council (GMAC), the international nonprofit association of business schools that owns the GMAT exam, Asia is the fastest-growing region in the world for the GMAT. The test is a standardized entrance exam used by more than 4,750 MBA and other graduate management education programs at nearly 2,000 business schools around the world.

GMAC research indicates that Indians wrote almost 27,000 GMAT exams in 2010, up from 13,544 in 2005.

“Asia plays a leading role in the global economy, and the strong GMAT activity we are seeing is a sure sign of the high value people in this region place on quality management education,” says Julia Tyler, executive vice president of member services and school marketing for GMAC.

With the demand for quality management education outstripping supply in India, a significant number of MBA aspirants are forced to consider business schools overseas.

“India’s growing economy has resulted in an increasing demand for management education,” says Ashwin W Joshi, executive director, Schulich MBA Program in India, York University. “MBAs are needed as Indian companies are growing at a rate of 20% per year.”

Supply and demand

While demand for professional managerial talent is on the rise, there is a shortage of seats at business schools within the country.

Every year, hundreds of thousands aspire to gaining admission into a leading business school such as the Indian Institutes of Management (IIMs) or the Indian School of Business (ISB). Given the stringent admission procedures followed at these institutes and the shortage of seats, less than half actually make the grade.

“While there are hundreds of institutions that offer MBAs in India, if the criterion is international respectability, then the number of institutions in India drops to a handful,” says Joshi. According to him, there are at best 10,000 seats in leading management institutes with demand for these seats in excess of 50,000. “There is a huge disconnect between supply and demand.”

At the same time, foreign business schools, especially in the United States, are dealing with a dip in applications from domestic students.

“Universities abroad are increasingly faced with shrinking application numbers in their home countries as resident students are pushing back their plans of enrolling in business schools,” explains Manan Pandya, founder and business manager at MBAfaqs, a company that provides free online US MBA counseling to students in India.

Add this to an increase in a number of schools and student capacity over the last five years and the vacuum only gets bigger.

“This has forced institutions to pin their hopes on foreign students. In fact, a lot of them have set up dedicated international student departments and regularly invest in marketing campaigns in large student markets such as India and China,” adds Pandya.

Another reason for the increase in student numbers heading overseas is the relative ease with which students can finance their studies with the help of bank loans in India.

“Add this to the interest that students in countries such as India have in studying and eventually settling abroad,” says Pandya.

Western business schools

According to GMAC research, Asian citizens continue to send most of their score reports to the United States, which remains the world’s most popular destination for GMAT scores.

Other popular MBA destinations include the United Kingdom, Australia, Canada, and New Zealand.

Last year, just over 22,000 students sent their GMAT scores to US universities, confirms Pandya. “This year about 25,000 will. Around 18,000 will receive admissions offers. Eventually, close to 16,500 will enroll. Another 4,500 to 6,000 students are expected to enroll at accredited online or distance MBA programs in the US. All in all, we estimate close to 20,500 to 22,000 enrollments this year.”

With Indian corporations scaling for success in global markets, the focus is on recruiting individuals with the skills to succeed in a dynamic, international marketplace.

“Indian workplaces are no longer Indian as more and more Indian companies are acquiring foreign firms or are playing in foreign markets. Indian companies need a global mindset... this is necessary for the continued growth of the Indian corporation,” says Joshi.

Joshi predicts that the next couple of years will witness an increased demand for specializations such as sustainability, design, and health industry management.

“We will go beyond generic MBAs to specializations, with increasing value addition coming from the latter.”

Meanwhile demand for foreign MBAs will continue to rise. Pandya agrees: “We believe that demand for US MBA programs will peak in 2012-2013. A lot of US business schools are either in process or have started thinking about setting up campus locations in India.”

In a year’s time, Union Minister Kapil Sibal’s proposed legislation will allow foreign business schools to set up campuses in the country. “At the same time, business schools within India are getting smarter and better at education delivery. We expect the demand to reach 35,000 to 37,000 applications before stabilizing and even declining marginally post that period,” adds Pandya.

While these predictions may sound like music to the ears of those considering an MBA program overseas, there are other benefits associated to international MBA programs.

According to most foreign business school graduates, the benefits of an MBA degree are experienced long after degree completion. To begin with, recruiters and organizations in India place a high premium on candidates with an MBA degree. Apart from that, most leading foreign business schools have active alumni networks in India, and offer services from leadership and professional development to business networking and social events. This, MBA aspirants would agree, translates to an excellent return on investment.

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