With more than 3,000 B-schools, India has three-times the number of B-schools as compared to the US. This difference becomes stark considering that the size of the Indian economy is one-tenth of the US economy. The end result is poor quality of education, oversupply of MBA graduates which in turn increases unemployability and underemployability among graduates.
A recent article notes that according to All India Council for Technical Education (AICTE), last year nearly 60,000, or 30 per cent of the approved 200,000 management seats, remained vacant. Also, the number of applications coming in for the Common Admission Test (CAT) for MBA entrance have decreased from 260,000 to 200,000 in the last three years.
This clearly indicates that Indian B-schools are in a bubble. Except top-100 institutions, most will suffer from bursting of this bubble which is characterized by irrational exuberance, oversupply and poor quality.
Interestingly, China is witnessing a boom in B-schools. The reason being that they caught on to the management education quite late and at the same time the size and growth of the economy is able to absorb MBA graduates. For example, there are nearly 230 B-schools offering MBA in China in 2010 while there are more than 3,000 B-schools in India.
Bubbles have a long history of existence around the world and they inevitably bust with severe damage to individuals, society and economy (remember dot-com bubble? housing bubble?). It’s time we collectively make our best effort to reduce the damage from the Indian B-schools bubble. Institutions have to start questioning if they are contributing to expanding the B-school bubble or containing it?
Click below to read my detailed article in EDU magazine.