The Indian manufacturing sector today hardly recruits management graduates from premier institutes.
The flip side: most management graduates do not want to work for manufacturing companies either.
Reason: Management graduates say that the pay is comparatively low in manufacturing firms and career growth is slower than in other sectors.
The irony: Most management graduates from premier Indian management institutes are engineers.
So, today, you have the spectacle of an engineer from a premier engineering institute increasingly selling soaps and detergents in a fast moving consumer goods company.
Says Delhi-based Shailendra Choksey, whole time director at J K Corp and a cement industry veteran, "This is not new. Typically, management students prefer to go with sunrise industries. About four to five years back the manufacturing sector was not doing well and there was a lot of hype around the IT sector. Moreover, we found that MBAs from premier institutes never stuck on and their commitment levels were very low."
Statistics bear this trend out. While the 2005 admission season has just begun, in 2004, 28 per cent of all IIM students preferred to be in the BFSI (Banking, Finance, Securities and Insurance) sector, while 29 per cent preferred jobs with IT companies.
Another 11 per cent took up consulting assignments, while the others preferred to work in marketing functions. An approximately 70 per cent of all IIM graduates in 2004 were engineers.
Says Choksey, "Now we prefer to recruit from tier-II and tier-III management institutes. The managers from these institutes have an ear to the ground, are able to interact better with our target audience which is typically rural and semi-urban, are more committed to their jobs and they also stick with the companies."
B V R Subbu, the outspoken president of Korean carmaker Hyundai's Indian operations, points out that the main issue is affordability. "Indian manufacturing companies or for that manufacturing as a sector worldwide cannot afford to pay the kind of remunerations to these management students from premier colleges like consultancy companies can. The business models are different and affordability is an issue."
"Moreover, now many of these students think it is below their dignity to work for manufacturing companies. So that could be another reason why manufacturing companies also typically do not venture out to these campuses. It is a very strange situation," Subbu says.
Agrees Prof Atanu Ghosh, who heads the management school at IIT Bombay: "Manufacturing has become blue collar today. And management students from premier institutes today do not stick on to a job for too long. The attrition rate is very high and hence the manufacturing industry is not interested. This apart, pay packets in manufacturing are very conservative compared to other sectors and career growth in manufacturing can be excruciatingly slow."
"Manufacturing companies today need not visit tier-I management school campuses because the quality of students from tier-II institutes is unbelievably good. Moreover these students are willing to soil their hands, are more realistic and realise that they cannot be in the boardroom in their third year with the company," says G D Sharma, vice president, human resources development, Larsen & Toubro.
"Importantly, they realise that since they are not from tier-I schools their opportunities in the outside market will largely depend on how well they do in their current jobs. So the tendency to shift jobs is much lower," Sharma points out.
Ghosh also gives a very interesting spin to why manufacturing today does not need MBAs from premier institutes any more.
"Today manufacturing is technology-dependent and there are high levels of automisation in every industry. Technology drives everything. And you can train anyone on technology-related matters these days. So why should you pay for a management guy from an elite institute?"
At the other end of the spectrum is a multinational IT services company like Cognizant Technology Solutions. For the fifth consecutive year, Cognizant emerged as one of the biggest and the most preferred recruiters of MBAs from premier B-Schools in India -- IIM Ahmedabad, IIM Bangalore, IIM Lucknow, IIM Calcutta, XLRI (Jamshedpur) and ISB (Hyderabad).
The IT firm enjoys the same slot as global management consulting and FMCG companies across these six premier B-schools.
The company also has a high ratio of MBAs. It has one MBA for every 30 professionals in the company. Overall, it has over 550 MBAs. Apart from recruiting MBAs from campuses in India, Cognizant also recruits MBAs from prestigious B-school campuses globally, including MIT, Carnegie Mellon and Columbia in the US and Asian Institute of Management at Manila.
"Cognizant has gained immensely from B-school recruiting," said R Chandrasekaran, Managing Director, Cognizant, who himself is an alumnus of IIM Bangalore. "We believe that our annual customer satisfaction survey (CSS) scores have been on the ascendant each year partly because of the B-school graduates we deploy in different roles. Their domain depth has helped us marry domain knowledge with technological excellence and has helped us pro-actively farm-out solutions to business pressure points of customers, rather than mere technology solutions."
"We have also been able to calibrate the dominant role they have played in winning new customers and in client-facing roles they have taken up, especially as client partners or relationship managers. As such, we see our investment in MBAs to be a critical differentiator for us. We would continue to make significant investment in such professionals as we have realised the value they bring to us and continue to bring to us," added Chandrasekaran.
So is the manufacturing industry and top tier MBA separation permanent. It would seem so.
As Aarthi Srinath, an Indian School of Business graduate and a senior business analyst at Cognizant software points out, "I joined Cognizant because it provides one of the most sought after and well-differentiated job profiles for B-school professionals -- in areas of business development, opportunity assessment, relationship management, corporate development, and domain excellence, and it does not use management professionals for pure technology assignments."
Can traditional Indian manufacturing companies match up? It would not seem so and the separation has been mutually beneficial too with graduates from second rung institutes gaining.
"A decade and a half back there was this problem that everyone wanted to recruit only from the big institutes. And the demand was such that these guys would just not stick on. This behaviour ensured that companies like ours had to go looking to tier-II institutes. And today it is like a loyalty programme. We keep going back to these same institutes as their graduates have stuck with us," says the HR manager at a steel manufacturing company.
According to Nirupama V G, Vice President at Bangalore-based human resource firm, Team Lease, which offers recruitment, training and temping services, the divorce is complete. "The cost proposition is not attractive for manufacturing companies. Today the talent availability is such that even in tier-II and tier-III institutes you get very good graduates on the first day so why go to tier-I institutes.
But she has some advice. "I would always recommend that the management graduates get some 'meat in the job' kind of experience. That kind of experience typically comes only from a manufacturing industry. So before they join a consultancy organisation like McKinsey, it always makes sense to get this kind of experience under the belt."