Management: Reaching for the top 10 schools

By Khozem Merchant
Published: January 25 2006 18:30
 
If you bring together Indian business leaders, a common link is likely to be their education at the prestigious Indian Institutes of Management. Such is the brand equity of a Masters in Business Administration from India’s six IIMs that the leading member, in Ahmedabad, is often spoken of in the same breathless manner as traditional centres of excellence such as Harvard Business School in the US.

The comparison may not be entirely fanciful: in the next few months Harvard Business School, already stacked with Indian faculty members, will appoint a new dean. A front runner is Srikant Datar, who graduated with distinction from IIM-Ahmedabad in 1978. If business schools are symbols of global civil society, as Amy Gutmann, president of the University of Pennsylvania, told Indian alumni of Wharton Business School, then arguably IIM-Ahmedabad is in the vanguard of globalisation in India.

“The most important element of globalisation is global mindset – no school here can match us in this regard,” says Bakul Dholakia, director of IIM-A, whose partnerships with global schools and exchange programmes is unmatched in India.

He describes the style of tuition as intellectually tough and built around team-based problem-solving of complex case studies. In year one of the standard two-year MBA, students and faculty have 700 hours of “contact in a learning situation”, compared with 650 to 700 hours over two years at a US school. “We do twice as much and it shows in our achievement. That gives us confidence to say that we will be among the world’s top 10 schools by 2010,” he says.

Many factors support IIM-A’s ambitions. Foremost is a rising global admiration for Indian management capability that can be traced back to IIMs. From McKinsey in the US, to the smartest Indian businesses, bosses are ex-IIM. This pedigree has turned IIMs into a prized hunting ground for global recruiters willing to pay gold for the best; HSBC bagged an IIM-A graduate with a salary of $152,000 last year.

For the same reasons that have turned India into the world’s leading offshore IT-services centre, IIMs are also seen as a cost-effective alternative to schools in North America, where applications are falling for traditional two-year MBA courses. Fees on IIM’s standard two-year MBA are (a subsidised) Rs160,000 a year while students on IIM-A’s new one-year MBA, starting in April, will pay $18,000, including most living expenses, compared with a bill of $100,000 at Insead in Europe. Along with the opportunity cost, the IIM brand value among the Indian diaspora is so strong that “they actually believe” they can get something out of it – and they do,” says Arvind Sahay, an IIM-A professor.

For its part, IIM-A is pursuing a strategy to enhance its global engagement, but is constrained by several factors that will hold back a full-blooded foray – which in business-school terms means signing on foreign students for full-time residential courses.

First, compensation for IIM faculty members is pegged to government pay levels, which are paltry, making the task of getting the best international teachers a non-starter. Second, IIMs, mostly government subsidised, struggle to guard their autonomy from the state. This month, India’s education ministry denied IIM-Bangalore permission to set up a campus in Singapore, arguing that domestic requirements were more pressing than those of rich clients overseas. Two years ago, the schools fought a bruising battle with a government that wanted to abandon the schools’ prized tradition of meritocracy for more egalitarian entry rules.

Finally, attracting full-time foreign (especially non-Indian) students will remain a low priority while local demand remains intense: only 0.16 per cent of 150,000 annual applicants win a place at IIM-A, making the school harder to get into than Harvard. Even if the doors were fully opened for foreigners they would have to match the exceptional academic standards of Indian entrants, which means attaining an equivalent GMAT (graduate management admission test) score of 700. “That can get them into Harvard or Wharton so why should they bother with IIM-A,” says Mr Dholakia.

The issue, as the school’s director therefore sees it, is to boost IIM-A’s brand. Mr Dholakia, an economist plucked from IIM-A faculty three years ago to lead the school, has not been idle. Admitting he functions within “limitations”, Mr Dholakia has focused on three short-term instruments designed to develop IIM-A’s global profile, and one long-term tool – the one-year MBA.

First, he has expanded the school’s international exchange programme. IIM-A partners 37 schools in Asia, Europe and North America. In the last academic year, 63 foreign students spent three-months of their MBA programme at IIM-A; 53 Indians did the same at corresponding foreign schools. A similar number are sent on summer internships with potential employers that usually translate into full-time placements. The programmes do not overlap, which means that about one-third of each intake at IIM-A spends two to three months overseas. For students such as Chaitanya Tatineni, a second-year MBA student from Orissa, a stint at ESCP EAP in Paris helped “dispel social stereotypes”.

Tatineni and others cite cultural integration as the most important experience from overseas stints. This does not seem surprising given that 45 per cent of IIM-A’s intake on the two-year MBA are fresh from undergraduate studies, while another 55 per cent arrive with a couple of years work experience.

In contrast, overseas exchange student Omar Maldonado, from the Dominican Republic but working as a consultant in New York before joining an MBA programme in the city, sees his time in India as an opportunity “to learn about India’s legal system and family businesses so I can return and work in the world’s fastest-growing economy”.

Mr Dholakia is also developing faculty exchange by arranging swaps at an institutional level and at a more personal level. The first will see overseas academics spending, say, a sabbatical at IIM-A; the second would bring IIM-A alumni, such as Raghuram Rajan, director of research at the IMF, back for short-term teaching slots. This practice is already widespread, and draws on a large community of Indian-origin faculty in the US.

A third front is expanding short-term management programmes that the school holds at the request of corporate customers overseas. Last year, IIM-A ran such courses in Egypt, Thailand and China, “teaching local executives, not expatriate Indians, and therefore building our global brand,” says Mr Dholakia.