Excellence Limited

It was in 1961; almost 15 years after India won her independence, that our leaders realized that we need educational institutions to produce managers and world-class professionals. The Government of Gujarat and the Indian Industry took the initiative and the Indian Institute of Management (IIM) was set up in the western state of Gujarat, registered as a society with a Board of Governors to oversee the functioning of the Institute. The effort was spearheaded by Dr. Vikram Sarabhai, a noted scientist and industrialist, other Ahmedabad-based industrialists (led by Mr. Kasturbhai Lalbhai), and the Government of Gujarat. This was the beginning and soon a few more such Institutes were set up across the country.

The IIMs were not just business schools but Schools of Management. In their formative years, they were required to collaborate with the Harvard Business School, and that is the reason why they followed the case method of teaching.

Till today, admissions in any of the IIMs do not come easy, or cheap. To qualify for a seat, a student has to clear the CAT (Common Admission Test) and by any standard, these are tough, standing as the golden dreams, next to the great IIT dream.

For decades this dream was untouched, students of IIMs were selected for the best corporate jobs across the globes, their faculty was almost impeccable, and the course has been at par with the best international standard management schools.

Then came trouble in paradise. The government of India decided that it was not getting its share of the excellence pie. The Minister for Human Resources Development, Dr. Murli Manohar Joshi stepped in on behalf of the poor millions of India and demanded that the fees be reduced from Rs 1,50,000 (almost USD 3200) per annum) to Rs. 30,000 (about USD 800 per annum). The straightforward reason being, excellent education should be more affordable for the common man. Any shortfall in funds, Dr Joshi claimed, will be met by the governments in the form of grants.

While in the literal sense this means exactly what Dr Joshi says it does, in the Indian context it means loss of autonomy, increase in political interference and even a scaling down of standards in the courses.

It does not take a product of the IIMs, a politician or an eminent industrialist to work out the disastrous result of this interference on the caliber of these students, from now on. But first we need to take a look at the kind students the IIMs produce and their value in the world placements market.

In the year 2000, more than 100 students got foreign placements during their campus recruitments, at the IIM Ahmedabad. Goldman Sachs, MSDW, McKenaa, S&P and WDR are some of the names that made appearance for the first time, and the spree continues. The highest salary offered in 2000 was Rs. 25 lakhs (by Indocean Chase) and for foreign placements highest salary offered is USD 150,000 (base salary + bonus and other incentives). The recruiters still came from some of the biggest companies worldwide, Citi, HSBC, Chrysalis, P&G, Execter, PWC, Bank Boston, J&J, SKB, Goldman, Morgan, BCG, MMG, Mitchell Madison Group, A T Kearney, Deloitte Consulting, Credit Suisse First Boston, i2 Technologies (whose offer was US $ 62,000 +500 shares ESOP) , to name a few. The top salary on the campus was offered by MMG (US $ 110 K + 1500 ESOPs).

This list, in the year Y2K spoke audible volumes about the value of the IIM graduates, even before they have graduated. In fact this was the first time that Goldman Sachs visited any campus in India and recruited too.

In the year 2003, there were 232 offers made for IIM Bangalore graduates, out of which 169 were accepted. The salary offered by foreign recruiters was between US $ 76,000 and US $ 130,000, while Indian companies offered between Rs. 7 lakhs (700,000) and Rs. 16 lakhs (1600,000).

The IIM Ahmedabad got 231 offers with he highest salary of US $ 82,000 and Indian salary of Rs 14 lakhs per annum. 182 of these offers were accepted.

IIM Calcutta got 297 offers of jobs with salaries between US $ 76,000 and US $ 95,000.

In the current academic year, recruitments at the IIMs have reached an all time high both in terms of salaries offered, as well as the corporate names that offer them. Over 20% of the batch was placed overseas reflecting an increase in the number of foreign offers from 39 in 2003 to 45 in 2004.

The list of the companies is as impressive as it was earlier, and some more. A total of 71 companies had come to the IIM-A this year for job placements as compared to 69 last year. The highest pay package for the IIM-A graduate this year was offered by Deutsche Bank, a whopping Pd Stg. 59,000 . The highest Indian salary offered was by Mckinsey consultants, Rs 14 lakhs per annum.

In this context, it would be prudent to mention that the pay packages that are offered to IIM graduates are way beyond even the best pay packages for other engineers and management students. This kind of money is not the norm in the Indian scenario, specially just after graduating. Obviously, IIM sets these standards, and has, till now, stuck to them.

These islands of excellence have reached this enviable market position that due to the constant endeavor of the faculty and students to better themselves. The method of teaching is usually Case study method and IIMs also boast of some of the world’s best-known names as their visiting faculty. The students have access to the best study material, no wonder they are so much in demand by leading banks, business houses and VC firms worldwide.

Have the Indian authorities even once stopped to think what will become of this excellence once the government (read politicians) gets access and even control over it? In typically Indian bureaucratic and corrupt fashion, every second minister’s child will ask to be admitted in these Institutions, through the political prowess of their parents, wards or just plain pressure. The Institutes will be forced to take in substandard students, diluting their standards. In the end, who will benefit from this strategy? The Indian students? Unlikely. Only politicians, once more. But then will they also really get anything? Once the student caliber slips, the number and quality of organizations that still recruit from Indian IIMs will considerably dwindle, and the centers of excellence will become puddles of mediocrity. Is this what we really want?