Is the MBA bubble about to burst?

The MBA Bubble
The MBA Bubble

He was always an ambitious student. He graduated from an engineering college with distinction and had always dreamt of an MBA degree from an elite institute. In this world of growing competition, he somehow managed to get a seat in a decent institute. After two years, he along with hundreds and thousands of MBA aspirants graduated from the business institute trying to find a good job. But did the MBA degree help him get that good job? Did it boost his career? Is MBA the last resort to career growth? Or there is a serious MBA bubble burst in India.

For many years, MBA has been the most sought-after educational degree. With dreams of a fat paycheck, glamour, luxury, and social status; it has been considered as an ideal career booster. The post liberalization era had come up with lots of opportunities for the MBA candidates and since then it has become a trend to have a post-graduation degree in business studies. Gradually, there was a horde of hard-working and ambitious scholars who started plunging headlong into MBA programs, which has now become a bubble that can burst anytime. The growing demand for MBA resulted in a slew of institutes offering the courses and changed the scenario of MBA marketplace. This has hugely caused MBA bubble burst in India.

This MBA bubble burst in India has led to the following changes –

  • Rising cost of tuition fee and a significant rise in inflation.
  • The upsurge in the cost of financial education loans.
  • Average starting salaries post MBA.
  • The inconsistent pattern in the hiring of MBA graduates.
  • The decrease in the employer sponsorship of MBA education.

Though it can be argued that getting an MBA degree imbibes additional skills in a candidate but does it enhance leadership skills?

Preconceived notions about MBA suggest that corporate leaders with MBA are better than the ones without it. However, this may not be completely true in the current corporate scenario. According to a study by Professor Miller, CEOs with MBA show self-serving behavior.

The study depicts that there are more than 30% CEOs with MBA. The figure was 12% in the 70’s and 20% in the 80’s. Despite their poorer performance, their compensation rise was 15% higher than that of the non-MBA CEOs. These CEOs were more self-serving as they always strived for their personal growth in climbing the corporate ladder. In the process, they become less inclined towards organizational growth, which leads to a major leadership loophole in their way of working.

With the emergence of a multitude of candidates with MBA degrees, firms no longer perceive MBA as a differentiating factor, unless the candidate is from a world-class business school. This trend of hiring from elite schools is also shifting with more organizations reconsidering unconventional means of recruitment outside of prestigious universities. Not only numerous schools are offering MBA degrees, there are different ways to obtain it too. There is an enormous number of online courses available and online MBA is enhancing in popularity. The people who don’t have time for full-time MBA programs, due to family responsibility or work commitments are opting for online courses to acquire the degree. In short, MBA candidates are not rare anymore, and an MBA degree does not guarantee employment.

With so many specializations and a gamut of ways by which a person can attain the MBA degree, the following factors hugely affect the usefulness of the degree –

  • The rank of the school –

The kind of job and salary structure one gets after MBA chiefly depends on the rank of the business school.

  • The specialization and its relevance to the job –

There are many specializations offered by the institutes. It becomes difficult to select according to relevance to the kind of job one wants to do. Moreover, in the current scenario, a person with a particular specialization doesn’t necessarily get a job in alignment with it.

  • The perspective of the hiring manager –

Even if a person has the degree that fits like a hand in glove with the job, the employment depends on the decision of hiring manager.

  • The economic scenario of the market –

The availability of jobs in market and recession play a major role in recruitment after MBA.

  • The need of street smartness in the corporate world –

These days the corporate world demands street smartness in a candidate more than just a degree. A candidate with MBA degree may or may not be endowed with the soft skills and guile sometimes needed to execute a job.

After investing two years and a humongous amount of money, it gets pensive to be in the zone of uncertainties regarding jobs.

Also, most of the top business leaders do not have an MBA degree. Mark ZuckerbergSteve JobsMukesh Ambani and even some of the new entrepreneurs are not MBA graduates,  and as mentioned earlier, an MBA degree doesn’t necessarily create leaders.

MBA candidates with the right skills and forte in business management are always going to thrive through the corporate ladder. But the excess of candidates getting into MBA colleges is a phenomenon that is converting into a bandwagon and is subject of apprehension that can burst the MBA bubble.


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