It’s unbelievable, scary, humbling—and even ironical. At a time when the highest priests of finance have taken such a mighty tumble, and dinnertime conversations centre on the prospects of global recession, perhaps even depression, everything about the art of doing business is being brought into question. Weren’t the guys running the show at Lehman or Merrill MBAs? How could Wall Street mess up so badly? And which financial giant’s time will come over the next few weekends? In a telling indicator of how the US is preparing for bad times, enrolments at American business schools have shot up of late, as executives prefer to ride out the storm in the comparative comfort of the classroom.

In bad times or good, an MBA is seen as a three-letter passport to a better future. That’s why we are here to rank them for you. For those searching for positive news, an MBA remains relevant, nay necessary, in today’s India. Yes, there is no escaping the pain some sectors, like finance, will face. However, for all the talk of belt-tightening, this remains one of the fastest-growing economies in the world, one that needs trained managers to open up new markets and be leaders of an increasingly youthful workforce.

Shop talk: Students of S.P. Jain Institute of Management, Mumbai, during a break

On the other hand, B-schools are just not adequately meeting the staggering demand for MBAs—2.5 lakh people took the CAT last year—in the manner they should be able to. There remains a huge gap between what industry demands from its newest managers and the quality they actually get. The focus, unfortunately, remains on the chosen few institutes. For the rest, business education remains at best an expensive gamble.

But before all that, and this is important, a bit about how we went about the rankings. Outlook’s survey—conducted with research agency GfK-Mode—ranks the top B-schools purely on the basis of objective parameters, based on data provided by institutes. This makes it unique in the sea of B-school rankings, most of which are purely based on the perceptions of different stakeholders (MBA aspirants, students, former students, faculty members and, of course, recruiters). There is a problem here: we feel many of these stakeholders (students, for instance) don’t have adequate knowledge to evaluate B-schools. The ones that do have the knowledge (like companies or faculty) may be biased towards the larger B-schools and those in their own geographical markets.

Up, up: IIM-Indore students on campus

Our solution to avoid bias was to follow the other accepted method of evaluation, an objective "facility audit". Here, we first seek out premium stakeholders (top recruiters on campuses) and evolve a consensus on what exactly they see as the right attributes in a B-school. Based on facts gleaned from the B-schools, we rank them. This is not only transparent and open to scrutiny, it also eliminates bias.

Then, of course, comes the obvious question: just how "objective" is the data provided by the B-schools? The only answer to that is through verification. GfK-Mode has physically visited 85 B-schools (some premium institutes were spared). The data they submitted was cross-checked and disregarded if found incorrect; some institutes were not allowed to participate if they weren’t open to verification. Sure, certain top B-schools like IIM-Calcutta and IIM-Bangalore have not participated in the survey.Next year, we will get them on board.

The key finding from the survey is that there is a huge gap between what India Inc expects and what B-schools deliver. Industry wants students and faculty to have more exposure to their ways of doing business; B-schools have been found lacking here, as is quite evident from the low scores most of them have on academic excellence. Industry doesn’t care where the faculty comes from—permanent, visiting, international—as long as it delivers results, reflected in the quality of students.

Weighing in: After the passing-out function at IIM-A

In fact, the survey reveals that private institutes are investing more money into faculty hiring and training than their more prestigious government-funded counterparts. To see if all of this is actually delivering results on the ground, read our story (The Great Guru Hunt) on what B-schools are doing to mitigate and work around the faculty crunch. Despite a few successful changes in strategy, the dismal faculty scenario will continue to worry B-schools for some time to come.

Similarly, industry is unhappy with the selection process followed by most B-schools ("garbage in, garbage out" is how one recruiter put it). This is perhaps one indicator of the high attrition rates in many sectors today, as managers (and employers) don’t end up meeting satisfaction levels. That is the reason we have chosen to open the debate on just what needs to be done to competitive entrance exams like CAT to make them a better judge of a person’s ability to be a good and effective manager (Matchstick Managers). When CAT is working towards going online, it’s perhaps time to rethink what the exam stands for.

There is no denying that there is an immense dearth of talent in industry today. That partly explains why, despite corporate India’s problems with the quality of managers being churned out by B-schools, they continue to hire them with fatter paycheques. But the tide is changing: with margins under pressure, firms are taking a long, hard look at workforce expenses. This trend became visible on campuses this year, particularly for the IT and financial sectors. Now, the US financial sector meltdown will definitely have an impact on Indian B-school placements.

Either way, B-school graduates will find themselves under more scrutiny. That is why it is important that MBA aspirants check very carefully what they are getting into. We are constantly bombarded by claims and promises from private B-schools and it’s easy to get swept away by the hype, advertising and even the awards some institutes claim to have won (Selling a Pig in a Poke). As we have argued earlier, there has to be stronger regulation to ensure that, blinded by all the noise, aspirants don’t spend huge amounts of money and get very little in return.

A ray of hope has come from a recent consumer court judgement that penalised an institute for charging fees without providing any service to students enrolled with it. The court also criticised the practice of institutes charging a lump sum fee in advance, binding "the students not to leave the institute even if quality of education or training there may be substandard."

There is a much larger issue here. There’s such a craze for MBAs that people think just the tag will do. Our columnist Nripjit Singh ‘Noni’ Chawla (Can Life Be Taught?) puts it well: "There is much that one learns in a good B-school.However, the best sword is useless in the hands of a novice. The skill of wielding it effectively can only be learnt on the field." Management may well be a science, but it draws on a whole lot of intangibles, from leadership to psychology. There is a social context too, as business can hardly afford to be divorced from its surroundings. Not at a time when we are witnessing battle after battle over corporate land acquisitions. The choice, then, is ours: Do we want to churn out an army of holistic managers? Or do we just want to sell and be sold MBA degrees?

Top 50 B-Schools
The overall list factoring in all parametres

Top 10
Top rankings of Government and private B-schools by various parametres...

Top 25: By Domestic Median Salary
FMS Delhi tops, followed by IIA, Ahmedabad

Top 5: By International Median Salary
IIM-Ahmedabad tops, followed by IIFT, Delhi.

How We Split The MBA Pie
The small print, the details of the methodology

Objective scores were generated by evaluating institutes under six broad parameters: 1) faculty strength and quality; 2) selection process; 3) interaction with industry; 4) placement records; 5) personality development; 6) facilities. As a parallel exercise, a sample of respected and significant recruiters from B-schools was contacted. A detailed interview was conducted with the senior-most executive in-charge of B-school recruitments. The objective was to understand companies’ priorities and the factors governing their selection process. These recruiters decided the relative weights of the factors and 41 sub-factors (see the tables above for details).