“A general question to recruiters. Why is it necessary to be from a top institute ( Tier 1) for jobs all across. Is it because the recruitment network is full of HRs from Tier 1, or is it something else. Tier two colleges have the same syllabus, grading system and skill certifications that tier 2 campuses do have as well.” – This was posted by an MBA student on LinkedIn. This is a very relevant question for all the young folks in India, especially the aspiring MBA candidates – what’s wrong with Non-Tier 1 Colleges in India?

College Brand is Not Everything, at least in case of Few Subjects and Foreign Countries

The College Brand might be less important when it comes to certain subjects (STEM) or degree level (say the undergraduate degree or a technical diploma). Alternatively, if you are someone with 7+ years of work experience, the college brand might not be as critical as your professional achievements.

But, if you are a fresher or having less than 2/3 years of work experience, the college brand will matter to some extent. More importantly, if you are thinking of pursuing MBA, then the college brand will be very important.

According to a 2015 study, school choice matters the most for business majors. Those who attended top schools (Tier 1) earn 12% more than their peers who went to schools that were in the middle of the pack. Then, graduates from those mid-tier institutions (Tier) earned 6% more than their peers who went to the least-selective schools (Tier 3).

The college brand is not that significant when it comes to attending an engineering college, at least abroad. The same goes for students pursuing degrees in natural sciences. Here is another article on when it does matter where you go to college.

College Brand is Very Important While Choosing a College in India

But, in India, the college brand does matter to a great extent (especially when it comes to getting your first job or first three years after graduation) even if you are from science, engineering or humanities background.

India ranked third in the annual World GDP contribution and soon it would become the 5th largest economy in the world. But, you must also understand that India has the second largest population of this planet. The current job market in India is extremely competitive.

Problems of Jobless MBA Graduates in India — *Image Source: Quora*

Statically speaking, the real jobs markets of India are few and the No. 1 spot is taken by Bangalore with its 2 million IT professionals racing to overtake Silicon Valley by 2020. Next comes Gurugram, which has emerged in the last few years as a name for providing jobs and its proximity to Delhi makes it a perfect choice for the job seekers. Then comes the Bollywood city Mumbai, which is also regarded as the commercial capital of India and being a port city, it has a variety of jobs in Logistics, IT, healthcare etc. The last but not the least, Delhi, the national capital which is one of the finest locations where one can look for jobs. This is also an extremely-important economic center for India with 1.5 lakh professionals working here are from states like Bihar, Uttar Pradesh, and NRC regions. But these so-called “job markets” have become extremely crowded and the scope for future employment looks bleak.

Related Article: Hiring Trends in India in 2018

Problem with Non-Tier 1 Colleges in India

Now, comes the talent pool. In India, the basic problems with the low-tier colleges are the questionable quality of teaching, lack of exposure to practical training & strong (or resourceful) alumni network, and limited access to the industry network in those colleges. More than anything, it is the lack of employable skills that affect the employability chances of the students and graduates from the low-tier colleges.

Image Source: India Today

The majority of these low-tier colleges (especially Tier 3 & 4) have been set up just out of commercial/business purposes while the education takes the back seat. Remember the ASSOCHAM Study of 2016? More than 80% of engineering & technical graduates in India are unemployable. This skill gap is not only in terms of technical aspects. But, also in terms of soft skills. Even if you compare the CVs of a final-year student (or a graduate) from a Tier 2/3 college and his.her counterpart from Tier 1 college, you will see striking differences.

Take the stream of Petroleum Engineering in India as an example. The E&P industry is a very lucrative sector in India and abroad. But, the current job market scenario from petroleum engineering graduates in India is not very encouraging, especially if you are passing out from a Non-Tier 1 Institute. Read the Problems and Solutions of Petroleum Engineering Students in India by Chandan Kumar Pathak.

So, as you can see, the college brand is quite important for any subject area in India. But, when it comes to MBA, the brand is even more important. To remain relevant to the primary objective of this article, we will now focus on the MBA vertical.

Why Brand is Important While Choosing a Business School

Co-Authored by Parinita Gupta

Today the world is all about brands, People wear brands, eat brands, listen to brands, and they’re constantly telling others about the brands they love. A strong brand is critical to generating referrals. You yourself are a brand in today’s social, corporate & competitive world and Branding differentiate you amongst others. As a brand, you represent the different brands you are associated with, in this context, your education.

Problems with Tier 2 & Tier 3 MBA Colleges in India — *Image Source: LiveMint*

Talk about a job interview or a business meeting, a major impression of yours gets built basis the reputation of institute you graduated from. Top schools are believed to produce top students. Thus selecting a reputed brand becomes very crucial while pursuing higher education, especially where students spend tons on their education as this is one of the key factor for their career growth and in the rising tide of expectation, we all are looking for measurable return of investments on our education – in terms of academic qualities, facilities, and most importantly employability.

Related Article: Top 40 MBA Colleges in India

Talking about employability and career opportunities, MBA is one of the degrees with better career opportunities and salary potential. The degree provides a holistic development of managerial skills through exposure to case studies, teaching, industry training, consultancy and research and interaction with various industry leaders.

All these aspects in management education help students to inculcate practical and efficient skillsets required in the industry. When management students enter the corporate arena of the global business environment where challenges faced by organizations are of a dynamic nature, they not only efficiently identify various issues but also come up with best possible solutions to tackle them through their developed skillsets.

In India, however, it is only the top business schools who are able to provide such an extensive talent who are able to meet the current industrial demands.

Talking a little bit amount emergence of MBA, in 1991, the private sector boomed with economic liberalization and demand for MBAs shot up. Companies were willing to pay any whooping amount to this new breed of graduates who were believed to fast-track the existing businesses. Management became a desirable career for students as it came with money as well as status. And even those who managed to get into Tier 2 and 3 business schools made decent in life. In short, MBA became the key to success in life.

But is the story same now? Does this degree still mean success irrespective of the brand you come from? In today’s business world and shrinking job market, the degree from a Tier 2, 3 or 4 institute does not hold the same prestige.

As per AICTE, in 2016-17, more than half of MBA graduates did not get hired in campus placements,i.e., only 47% of MBAs were placed which is 4% less than the previous year. These numbers do not include graduates from the elite Indian Institutes of Management (IIMs) which are not affiliated to AICTE.

Adding to the overall jobs crisis, about 200,000 MBA students passed out in 2016-17, Out of nearly 5,000 management institutes across the country.

Excluding graduates from the top 40 MBA colleges in India, only 7% of MBA students from Indian business schools got jobs immediately after the completion of the course, an ASSOCHAM report said.

Image Source: India Today

Adding to this adverse situation, came the economic slowdown from 2014 to 2016, which lead to a decrease in Campus Recruitment by 45%. This resulted into shut down of 220 B-schools in top cities such as Delhi-NCR, Bangalore, Mumbai, Kolkata, etc. And 120 more B-schools are queuing up to meet the same fate.

Due to a poor ratio of MBA students to top quality B Schools, the top CAT aspirants passing with 80% plus get through top B schools, which has very limited seats. The remaining 40000 or more students have nowhere else to go as their ambitions are high and therefore are not willing to accommodate themselves for a B or C grade Business school.

The reported problems with management education in India leading to a catastrophe of future of MBA in the country were due to limited seats in Tier-1 B-schools, lack of skill-based education in smaller B-schools, poor quality control, and infrastructure, low-paying jobs through campus placement and poor faculty.

Return on Investment is Big Problem with the Tier 2 & 3 Business Schools in India

To top it all, the biggest reason behind the decline in quality MBAs is the outdated curriculum. MBA graduates are spending a ridiculous amount of money on their management education, but after graduating, most of them are earning a mere 8000 to 10,000 rupees per month, if at all they find jobs through placements. Barring a handful of top business schools like the IIMs, most of the 5,500 business schools in India are producing “unemployable” graduates (93% of MBA graduates), earning less than Rs 10,000 a month if at all they find placements, an ASSOCHAM report said.

Although, the 8K – 10K per month jobs are applicable for Tier 4 MBA colleges. Even the MBA graduates from Tier 2 and Tier 3 colleges are also struggling to find jobs with 40 – 50K per month salary. The Tier 2/3 MBA colleges are not cheap at all. Those MBA programs cost INR 5 – 12 Lacs. In fact, the fee for a two-year MBA programme at many of the Tier 2 Institutes can go up to INR 16 Lacs.

Image Source: Economic Times

But, the MBA graduates from the Tier 2 and Tier 3 colleges end up with job offers of INR 2 – 3 Lacs per year. By comparison, a student from one of the top B-schools can expect an annual package of INR 17 – 18 Lacs on average. Read the news article on Tough Lessons for MBA graduates from Tier 2 & 3 B-Schools by the Economic Times.

Elite Business Schools in India

There are many advantages of attending an elite business school with super brand power. The key advantages are:

Respected faculty: These faculty members are known well and respected throughout the industry, frequently manage Directorships at Indian and Global firms and have recently also increased research throughput, improving rankings in Global fora.

Global Rankings and networks: Alumni networks of IIMs exist outside India, not just for ABCL which are deep-rooted and productive but also for the new IIMs like Kozhikode which also rode the early years of the Global IT boom and has alumni in more countries than Indian states. These networks pull through at the workplace and in personal lives thru the presence of the extended family. Some good Tier 1 institutes like the Jamnalal Institute of Business studies and SP Jain also share these advantages.

Stable and Productive coursework: Many ‘good’ Tier I b schools would survive on a few faculty’s reputations while coursework at the IIMs is de rigeur and topical, even independent of the vagaries of changing faculty cadres especially as a faculty shortage keeps faculty mobile. Recruiters are assured of the quality to expect from the IIMs.

Good internships: Some MBAs truly believe students are as good as their internship. This is also obvious in the proliferation of PPOs to match recruiter concerns on missing out and validate students’ real life/industry acumen. Searching for a good internship from any good Tier I b school like FMS or others is not so easy especially if enough internships are not offered on campus.

Business database on recruiters, roles and interview processes: Many students find comfort and education in knowing each recruiter’s experiences from alumni/senior students, that are easily available at the Top IIMs. It becomes difficult to bridge the gap closer to interview days and in fact, recruiters avoid going thru hoops to teach students what to expect and what they want from candidates in interviews such as the Case Interview at consulting companies and the pressure interview for Sales/Client facing jobs.

Obviously, getting into IIMs or ISB, the premium or elite business schools in India, is not easy. But, you should try to attend a Tier 1 business school by all means.

Otherwise, it’s only wise to stay in the job and keep gathering work experience. You could also take the advantage of MOOC platforms and do online training courses & certifications according to your requirements.

To tackle the current situation and protect the future of MBA aspirants in the country, it is advisable for students to not only scope Indian B-Schools while pursuing MBA but also extend the periphery to foreign B-Schools, given the limited top B-Schools in India.

Although the trend in India of getting an MBA first and then getting a job is changing, in most other countries, top management institutes focus on providing weight to students with some work experience after the Bachelor’s degree thus helping them to find a decent managerial level jobs early in their careers.

Some of the other advantages of doing an MBA abroad includes:

Better Employability: Foreign universities that are offering accredited MBA courses for international students prepare them well for mid-level and management roles in businesses.

Accredited Salary: Better salary comes as a bonus to foreign MBA graduates. For example, graduates from the university like London Business School, with the reported employment rate of 91% for MBA graduates, a good salary is a default advantage.

On-the-job experience: Although Top Indian MBA programs are at par with the International degrees, however management graduates from India lack on-the-job experience. Summer internships are offered in the interim as gap fillers.

Career Growth and Mobility: Acquiring management degree abroad offers a broader platform to learn and grow both academically and culturally. Gaining such exposure will assuredly offer the student a lot of confidence to perform and sustain for a longer period of time, therefore providing more career options and mobility.

Cultural Know-How: A foreign MBA degree is not only a great way to gain organizational skills but also a fanciful way to know the different culture in the world since in global market you will not only interact with the nationals but also be exposed to people from different countries.

The brand issue is also applicable to foreign business schools. There will be obvious differences between attending a top-tier business school and a tier 2 business school. But, given the available choices of MBA abroad destinations and number of top-tier business schools, you would have better chances of getting admission to a business school with strong brand power.