Is pursuing an MBA degree a risk during an economic downturn?


A couple of weeks ago I had written an article on Do you need an MBA? It seems to have had an impact on the CAT aspirants this year.

According to an article in the Mint, the number of MBA aspirants appearing for the CAT is down by almost 76,000 since 2008. The trend is similar for other aspirants in other entrance exams like XAT and SNAP.

Why is this happening? I did some analysis and came up with three reasons.

Plain Post-It-001

1. The Economic downturn offers safety

In the West an economic downturn sees more people enrolling themselves for higher studies. But in India it is the opposite.

More people put off plans for higher studies and instead concentrate on holding on to their jobs. As most Indian corporates are averse to laying people off (no matter what the situation), employees have to just show up for work to be able to keep their jobs.

Having a job is seen as being more secure than scouting for one in a downturn.

In the West, companies are not averse to laying people off during a downturn and hence to avoid this eventuality most people take the opportunity to go on unpaid sabbaticals (or plain quit their jobs) to pursue higher studies including MBA.

2. MBA placements are difficult during a downturn

In the West most B-schools do not guarantee placements and students have to hunt on their own for opportunities. As a result they spend a lot of time networking with corporates, attending conferences and going to other countries to get international experience so as to improve their chances of getting a job. This also exposes them to real challenges and opportunities.

In India, most B schools guarantee placements. So all the student has to do is show up on campus, attend classes and focus on academics.

The job of finding a job is handled by the institute, aided by bodies like the campus recruitment cell or placements cell. Most students in Indian are not familiar with networking or connecting with corporates outside of campus.

During a downturn students are not confident of the institute’s ability to find them appropriate jobs and hence prefer not enrolling for the course. Additionally, as most CAT aspirants don’t have work experience (unlike their peers in the West), they usually don’t have any professional networks to tap into for opportunities.

3. Lack of entrepreneurship

Entrepreneurship is not high on an Indian MBA’s radar of job opportunities. But this is one of the key factors considered by students in the west.

Typically 30-40 % of B-school aspirants in the West accept job offers either with a startup or start a new venture on their own.

Facebook and Google are among the best examples of how companies were started from campuses. In India, although entrepreneurship is catching up, most B school students still prefer corporates hiring them in order to justify their investment (time and money) in B school.

Do you agree with my possible reasons? Please share your views.

  1. Altaf Rahman says

    What Economic downturn has got to do with pursuing MBA?
    The above case studies you have discussed are those ’employees’ who decide whether to go for MBA coz Co may lay them down. I am not discussing this segment of people.
    In India, annually tens of millions of youngsters come out of Colleges. Those who decide to go for MBA will not look if Economy is going down or up. They only look for if their dad can afford their study expense or if they have to go for loans.
    Compared to this segment, I feel those already employed who want to go for MBA are a small one.

    I am not sure about the real scenario. Just my thinking.

    Love to read Vikram on :)

    Just my two paisa :)

  2. Yogendra oza says


    I am running a website

    I want to republish few of the articles related to MBA from your site and I will give reference link as well as will mention the source.

    Can I do it?


    1. Dr vikram says


      You might have to check with Arun Prabhudesai on this..

  3. Kshitij says

    In the west too B-School students hardly start their own venture. For e.g. Kellogs Business School (One of the top B schools in US), had just 3 people starting up out of a batch of 600 last year. Facebook and Google were built by an undergrad engineer and 2 PhD students, not B School students.

    I often feel the concept of “B School” is ironic, because they in a way discourage entrepreneurship. They dig your fingers deep in debt (more in US than in India), and then ask you to be become an entrepreneur.

    Plus as any entrepreneur would know, analyzing cases and making presentations helps you get nowhere when starting up.

    1. J says

      +1. See what Guy Kawasaki has to say about MBA

      1. J says

        ** that +1 was meant to be +1 Kshitij

      2. Dr Vikram says

        I think Guy is a very entertaining guy, but he is a good example of the silicon valley dream. He is what most folks in the valley want to be like, not very high up on my look up to list…

    2. Dr Vikram says

      hi Kshitij

      Just visited your profile to give me some perspective as to where you are coming from. Interesting venture I assume is selling organic jute bags..(Correct me if I am mistaken).

      Analyzing case studies and making presentations will not help an entrepreneur ? That is a strong statement to make. i assume you are successful and hence you have the right to pass judgement on something like case studies, but till I think it is slightly over the top statement. I feel the focus of the piece was on the difference in the reaction to a downturn considering our socio economic conditions….

      I am not sure about Kellogg but a school like Wharton encourages this movement. you might want to check out this link

      But lovely perspective and would love to know more about your venture…

  4. J says

    1. Point 2,3 seem fair enough. Not sure about point 1.

    2. “Facebook and Google are among the best examples of how companies were started from campuses” – the worst examples you could have quoted.
    They came from engineering schools and not from business schools. Eudardo did not do much beyond putting money into facebook, that is not a reflection of his MBA but the wealth of his dad.
    Quote examples of companies that came from business school campuses/hostels.

    3. See this:

    1. Dr Vikram says

      Can you give me some examples ?

    2. Dr Vikram says

      And J I think you might need to elaborate more on your comment. The way it is written is totally confusing. A little bit more clarity will help with or without an MBA.

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