At the end of 2008, applications for MBA programmes across the globe had reached unprecedented levels. A survey by GMAC, the Graduate Management Admissions Council, of 500 schools around the world found that the number of potential MBA students had risen by a staggering 64% on the previous year, as managers and professionals were keen on business education as a way of turning the economic crisis into a career development opportunity.
Among Indian applicants, however, there is increasing evidence that demand for places on programmes in the US, historically the most popular international destination, is beginning to tail off. “Demand from international applicants has softened,” says Rose Martinelli, associate dean at Chicago Booth, “and particularly from Indian candidates who have traditionally made up a very large pool of talent.” Other top schools have reported a 5 to 10% decline in international applications in their recent second round, with Indian numbers lower in particular.
This reduction in numbers does not seem to have been caused by any disillusionment with US business education but rather by two factors directly connected to the economic downturn. Namely the increasing uncertainty about the H1-B visa, the standard means to stay and work in the country for Indian MBA graduates, and the shortage of loans to cover programme costs.
At many top US schools, Indian applicants make up between 10% and 15% of overall applications, and yet they often secure less than 5% of the places in the programme. There is some comfort, therefore, in the recent fall in demand, with the implication that competition among Indian candidates will be slightly lower.
However, as Pete Johnson, admissions director at UC Berkeley — Haas, points out, “Regardless of the volume, the most important factor is always the quality of the application. The applications that stand out are those from applicants who have strong academic preparation, good work experience and letters of recommendation, and a clear understanding of what they will gain from their MBA experience.”
So is this decline in Indian MBA applicants confined purely to the US market, or are other key international destinations also being affected?
At the McGill – Desautels School in Canada, associate director Aimee-Noel Hartley reports a more positive picture. “We’ve actually seen a 20% increase in international applications this year,” she says, “and our applications from India have nearly doubled. Lower tuition rates than in the US and a new immigration policy, which allows overseas graduates to stay on and work in Canada seems to be making us an increasingly attractive proposition for foreign students.”
The same appears to be the case for the other major market for Indian MBA candidates — Europe. At one of the region’s leading schools, ESADE in Spain, numbers of applications for the full-time MBA are up by 56% compared to last year, and those from Asia are up by 95%. “One of our advantages is that, so far, we haven’t really had any problems with sourcing student finance,” says admissions director, Camila de Wit. “Like many European schools we work actively with a small number of loan providers, helping to ensure that the rate of default on the loans is as close to zero as possible. This means that loans to MBA students remain one of the more secure options for financial institutions.”
Though the UK has announced a tightening of entry requirements recently, demand has not slackened. “As yet, we haven’t seen any impact on either applications or the number of applicants accepting their offer of a place”, says Rachel Killian, MBA recruitment manager at Warwick Business School, UK. “On the contrary, we’re actually seeing an increase in applications to the 12 month accelerated full-time MBA programme of around 25%, as well as higher GMAT scores from candidates. It seems that candidates are realising that the weakness of the pound makes this a good time to study in the UK.”
According to Patrice Houdayer, dean at EM Lyon business school in France, another reason why Europe’s programmes seem to be attracting interest at present is their bias towards the teaching of entrepreneurial skills. “Our applications are well up on last year,” he says, “and, in talking to prospective students it’s clear that easier finance and visa requirements in Europe are not the only draws. In an uncertain environment, ambitious professionals are looking to business schools like ours to provide them with the skills, knowledge and networks that will allow them to create their own enterprises, and turn what at first seems a challenge into an opportunity.”
Faced with this increasing competition from European schools, leading players in the US are taking their own action to address some of the issues that are influencing the application decisions of potential students. Harvard Business School, for example, has recently announced a new loan scheme targeted specifically at international students who do not have a US financial sponsor. “Our overall objective is to ensure that a Harvard graduate education remains accessible to talented students regardless of where they live,” explains Dan Shore, the school’s chief financial officer. Chicago, Darden, Wharton and Yale are amongst other schools that have secured new No Co-Signer Loans for International Graduate Students.
This is good news for aspiring applicants. After all, the fundamental benefits of getting an MBA have not changed, despite the recession. In fact, as acknowledged by the graduating classes of 1992 and 2002, themselves victims of the downside of an economic cycle, when things gets tough you are better off with an MBA than without. They are then well set to take advantage of the subsequent economic upswing. In part this has to do with the managerial skills you acquire, that will stand you in good stead for the rest of your working life. And the career services at a good business school guides you in a challenging job market, to help you work out your competitive advantage to then pursue with determination.
Schools are also digging deep into the resources of their alumni and academic networks to provide practical help to graduating MBAs in their search for a new career.
“One of the best aspects about the MBA is the wealth of its network, if you are willing to explore,” says Roshin Joseph from Bangalore, who is currently studying at Georgetown – McDonough. “Two of my professors have gone out of their way to help me, by reaching out to their contacts in firms that they consult for. These recommendations to senior level employees have helped me get my foot in the door when I applied to the firms for employment opportunities. My classmates also share and exchange contacts.”
It seems that the pull of the MBA dream is still strong — promising a lifelong return that will outlast the current economic crisis.