The one-stop for the biggest shifts in India’s $180 billion education market. Served hot and weekly, Thursdays.
Good Morning Dear Reader,
Trigger warning. This edition is about MBAs and placement packages. I know you’re going to have an opinion. I only ask that you put it aside until you’re done reading. 🙂
Ok, now onto the edition.
What catches my attention, time and again, are the extravagant salary packages that MBA grads are offered. Packages offered to Indian Institute of Management (IIM) graduates, as most of you know, are the ones to beat.
This year though, a different name is doing the rounds.
Mastering the art
The name is Masters’ Union.
It’s a new business school based in Gurugram, a city in India’s National Capital Region. There seem to be many things recommending this new B-school: a small student cohort, expert teachers, a real-life Rs 5 crore (~US$650,000) investing corpus for students to experiment with... But all these things pale in comparison to the one metric that Masters’ Union wants you to know about the most.
[Source: Marketing email sent by Masters Union]
At Rs 29.12 lakh (~US$38,000) per annum, Masters’ Union claims its students got the highest average salary packet in the market in 2021. Better than the IIM-A-B-C holy trifecta (IIM-Ahmedabad, -Bangalore, and -Calcutta). Better than the Indian School of Business (ISB). Basically, better than the best.
There could be several factors at play here. The inaugural cohort is just 60 students. An over-enthusiastic placement machinery. Better industry-academia connections because of visiting faculty.
Whatever the reason, Masters’ Union knows exactly how important this metric is, and it’s leaning heavily into it.
It has generated a “placement report” for its very first batch—giving an exact break-up of the median salary offered, as well as what students are actually getting in-hand.
It got the report audited by the same agency that audits IIM-A’s placement reports.
The great MBA schadenfreude
In 2010, an IIM-A professor called Saral Mukherjee thought that B-schools in India needed a reality check.
He felt they should no longer go around brandishing just any placement number they wished—which was usually that one outlier Rs 45 lakh (~US$60,000) salary package. Instead, colleges should stick to a format that’s uniform, replicable, and reliable. To add an extra layer of credibility, colleges were encouraged to get these placement reports audited.
This is how the Indian Placement Reporting Standards (IPRS) was born.
The two key things IPRS asked for? A break-up of the fixed versus variable components of the average salary package. And that the report be audited by a credible third-party agency. Masters’ Union definitely got the memo.
Sadly, the standards—an IIM-A initiative—didn’t take. While 25 colleges had initially agreed to comply with IPRS standards, only two institutes had signed up by 2013. One was IIM-A, and the other was the SP Jain Institute of Management, Mumbai.
Things are a bit better now—ten institutes use the standards currently. But only IIM-A and IIM-Udaipur have reported data consistently. Even the other two parts of the IIM A-B-C trifecta refused to comply with the standards.
Institutes that chose to ignore the IPRS had a few arguments. There was no point in reporting placements if companies didn’t report a proper break-up of fixed and variable components, they said. And declaring a joining bonus as part of the overall compensation is also to be called out, according to the standards. But if companies aren’t going to clearly demarcate all this, what can colleges do, really?
IIM-A, for its part, just wanted everyone—including companies—to pull up their socks. This is an excerpt from a Business Standardreport from 2013:
“We are asking for just the separation of guaranteed cash from the one-time and variable components namely—basic plus additional guaranteed cash component; one time payment and maximum of variable component. The addition of these three components is the maximum earning potential. This is not too difficult for a firm to share,” says IIM-A on the website.
But it seems like at least one institute has heard IIM-A’s plea, and used its reporting standards almost eight years later—Masters’ Union. There is, sadly, no *roll credits* moment for IIM-A in this new report.
Salary is a noisy number. Salary is the only number.
In many ways, IIM-A’s IPRS was a portent. It’s as though they knew placement packages were going to increasingly dominate news cycles and rankings. And, most crucially, dictate how students make their choices. This is how the system works:
Higher placements—> More student enrolments—> Who seek higher placements—> More enrolments.
By now, most people in the B-School universe believe that this vicious cycle is too entrenched in the system. Either you ignore the number of placements or you find a way to make it work for you.
If you’re a student and decide to do the former, there’s a whole host of societal expectations ready to test your patience. If you choose the latter, though, you have to understand that unaudited placement data is just too damn noisy.
The challenge here is that the magical placement number, no matter how dicey it is, is still the only “easy” arbiter. Everything else is, arguably, too subjective and too hard a metric for students to gauge their prospects by. Especially if they’ve taken out hefty loans for their MBA.
It’s too difficult to compare faculty quality, or student groups across MBA colleges, says Janat Shah, the director of IIM-Udaipur and one of the few in the IIM universe to support the IPRS. Shah knows that following the standards have probably dragged the school’s average salary package down by Rs 1-2 lakh (~US$1,300-2,600). But he’s not overly worried. “We care about the signal we’re sending about transparency. I think our students get it,” Shah told me over the phone.
If salary is the only number students are going to care about, then let that number be vetted. I think Masters’ Union has learnt this lesson well. And early.
Fewer engineering colleges are a good thing for India’s budding engineers
by Arpit Arora
By 2018, there was a firm trend underway that the All India Council for Technical Education (AICTE) couldn’t ignore. A large number of seats in engineering colleges across India just weren’t getting filled. In response, AICTE constituted a committee led by BV Reddy, the chairman of Indian Institute of Technology-Hyderabad (IIT-H), to recommend short-term and medium-term plans for engineering education in India.
When the committee went back and looked at the numbers, they realised that in the academic year 2017-18, capacity utilisation at the undergraduate and postgraduate level was as low as 49.8%. In 2019, the committee advised AICTE to stop setting up new colleges from the next year, and “review” the creation of new capacity every two years after that.
The committee has now reiterated the recommendation for a freeze in its December 2021 interim report, barring “a few exceptions”.
More on the “few exceptions” soon, but the panel’s recommendations don’t come as a surprise. Over 550 colleges have been closed over the last six years, and the number of seats being offered have hit a 10-year-low for academic year 2021-22.
The same committee report observes that in 2017-18, capacity utilisation dropped to around 40% for traditional courses such as Mechanical, Electrical, Civil, and Electronics engineering. But fields such as Aerospace Engineering and Mechatronics were hitting capacity utilisations close to 70%.
There is a clear and rising demand for emerging technologies. And where there’s demand, there needs to be supply.
Remember those “few exceptions” we spoke about earlier? Well, the committee has mentioned in its interim report that the AICTE can approve new seats in emerging fields such as artificial intelligence (AI), machine learning, and robotics. They also recommend that institutions convert current capacity in traditional disciplines to newer fields t0 meet the demand.
This shift is great news for businesses too. Over the last few years, technology adoption in these new areas has skyrocketed, and businesses need talent to match. It’s also an opportunity for businesses to partner with colleges and help shape their courses to best fit the evolving tech landscape.
Back Bench
This Ads up! - Out of the Rs 446.72 crore (~US$59 million) released under the Beti Bachao Beti Padhao (BBBP) scheme during the 2016-2019 period, a whopping 78.91% was spent only on media advocacy. Also, since the inception of the scheme, Rs 622.48 crore (~US$82 million) was released to the states out of a total budgetary allocation of Rs 848 crore (~US$110 million). The states ended up spending only 25% of that amount.
New Frontiers - Edtech companies in African countries haven’t really received much VC love. But with millions forced into studying remotely, the pandemic has changed this. A Tencent-backed Nigerian edtech company—uLesson—has gone through all the pivots that are possible within its short, two-year stint in edtech. From simple recorded lessons on SD cards to live classes, homework help, doubt solving, online quizzes, and… wait for it… coding modules. It even offers a “device + lessons” bundle, and has now added school-based products since physical classes have resumed. This is the equivalent of an edtech super app, if there ever was one.
But wait, isn’t there one already? A TechCruncharticle on uLesson, which raised US$15 million in a Series B round this month, says the edtech is a prime acquisition target for Byju’s. The latter is currently stomping around the globe looking for quick, inexpensive buys to add to its portfolio.
This would be a great outcome for uLesson’s venture backers. As for its founder, Sim Shagaya, at least he’s asking very un-Byju’s like questions.
“How do you measure subject matter mastery over the cost of data? I think that ratio is difficult to get,” Shagaya says.
May not be a culture fit, friends.
Share this edition
That’s all we have for you this week! We hope to see you again next week at 7 am for the final edition of Ed Set Go this year. Yep, 2022 is here already.
As a bonus for sticking around till the end, here is a mini podcast recommendation for you. Ever wonder what happens when edtech solutions on the ground circumvent teachers by design? Listen to this episode of the aptly titled Failure Files by India Development Review to find out!
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