Bullish B-schools

After a few years of sluggishness, placement season 2004-05 is seeing a raging bull market for MBAs. Signs of the coming boom were evident a couple of months earlier when top-rung business schools outside the IIM circuit reported smart increases in both average and top salaries offered.

But now, with the IIMs raking in the shekels, it's official. To be sure, headline-grabbing figures like Rs 50 lakh annual pay packets need to be taken with a pinch of salt""some years back, the odd gross package even hit Rs 1 crore""because these relate to dollar-denominated offers for postings abroad.

But what is noteworthy this time is the sheer number of companies fishing in the B-school pond and the extraordinary speed with which potential recruits are being snapped up.

IIM, Bangalore, for example, wound up shop on day two itself, while IIM, Ahmedabad, and IIM, Calcutta, have reported an unprecedented rush of recruiters.

In a year in which the economy is booming, the stockmarkets are bullish and business confidence is high, it is not surprising to see companies making a beeline to B-school campuses.

With the US economy going great guns for well over a year now, the big interest shown by foreign companies was also only to be expected.

India has always been a happy hunting ground for global consulting firms and investment banks. What's new this year is the high enthusiasm displayed by domestic recruiters from both new categories and old.

While financial and software services companies continue to recruit from campuses as energetically as ever, the FMCG sector appears to be making a comeback.

It is probably sniffing a turnaround in fortunes after two years of strong GDP growth.

One trend, however, has gone largely unnoticed. Thanks to a rising stockmarket, the financial sector boom has extended far beyond just banks and insurance companies to brokerage houses and other intermediaries.

While few brokers can afford to pay top dollar for MBAs from Super League B-schools, they have been skimming the cream off most second- and third-rung schools with a vengeance.

A few weeks ago, this newspaper quoted the spokesman of a broking company as saying that he was recruiting several hundred MBAs primarily for sales jobs.

If this is the case with one broker, one can imagine the numbers being recruited nationally. The IIMs and the Super League schools may grab all the attention, but rising economic optimism has shifted the overall demand curve for MBAs to the right. Truly, a rising tide lifts all boats.

A more subtle point can also be made at this juncture. The sheer numbers being recruited this year suggest that not everybody is looking for tomorrow's managers on campus; some companies are merely using the B-school winnowing process as a substitute for their own recruitment processes.

Nothing wrong with that, but the rising cost of MBAs could in due course tilt the balance in favour of an in-house sifting and sorting of recruits. For their part, the Top 50 schools need to use the present bull market for MBAs to reinvest in themselves.

All said and done, the quality of B-school faculty and research leaves much to be desired. If these investments don't begin to happen now, B-schools will have only themselves to blame if the queue of recruiters suddenly shortens at the next turn of the business cycle.