Novel Corona Virus can kill the MBA Institutes

 

The COVID-19 pandemic has already cost management institutes a bomb. The shutdown has meant that the Executive-Education has vanished and the accommodation, catering, and non-tuition income has evaporated. It is estimated that non-tuition income of some of the top ranking management institutes in India is upwards of 35-40 percent of their annual income and this could be the first loss of a major revenue stream.

Universities and educational institutions worldwide have been forced rapidly to scale up online teaching, which has typically entailed unexpected expenditure. The same may become true for the management institutes in India. They will have to find money to continue paying their staff, as well as maintaining and cleaning the massive infrastructure facilities they have created.

The economic downturn will force thousands of youngsters to defer entering MBA institutes. Encouraged by successive governments, who wished to bolster commercial education in the name of realistically priced education, top-ranking management institutions have come to rely on unregulated pricing of their degrees and developing multiple revenue streams. A collapse in the student market, which seems probable, would have serious consequences.

Prospective students might also be put off by the physical distancing requirements that are likely to prevail on campuses for the foreseeable future. Much will depend on the dynamics of the pandemic. No one really has a handle on what will happen when it comes to end-June, which is the time when most management institutes are busy trumpeting their induction programmes for the new arrivals. Hesitant to acknowledge but very few institutes are certain that they will be able to open on time.

The shift to online learning looks set to continue at least until the advent of a successful vaccine for COVID-19. The mere act of listening to wise statements and sound advice does little for anyone.  In the process of learning, the learner's dynamic co-operation is required.  Such co-operation from students does not arise automatically.  It has to be provided for and continually encouraged. During most of undergraduate education, thinking out original answers to new problems or giving new interpretations to old problems is assumed an adult function and, as such, denied to students.  The task of the student during that time commonly is taken to be one chiefly of familiarising himself with accepted thought and accepted techniques, these to be actively used later.  The instruction period, in other words, often is regarded both by students and by teachers as a time for absorption.  The undergraduate colleges turn out knowledgeable and informed students and teaching at the undergrad degree can be adjusted to on-line teaching except for the lab-work.

Thus, many student entering graduate schools have become habituated to the role of a passive receiver.  The time inevitably arrives, however, when young people must engage in practical action on their own responsibility.  This needs wisdom; knowledge alone is of little use.  Students at MBA School have a little time, at best two years, to achieve the transition from what may be described as a childlike dependence on parents and teachers to a state of what may be called dependable self-reliance.

MBA graduates are expected to take on the roles of administrative positions of importance. The qualities needed by people in such positions are ability to see vividly the potential meanings and relationships of facts, capacity to make sound judgements based on these perceptions, and skill in communicating their judgements to others so as to produce the desired results in the field of action. These facts pertain to persons and things.  MBA education is consequently directed to developing these qualities of understanding, judgement, and communication leading to action, amongst students. Teaching at the MAB degree cannot be adjusted to on-line teaching except for transfer and comprehension of content.

One 3-credit hour on-line course in the best US University, which usually means 45-hours of teaching, costs around $17-$22 per hour. This is lower than the fee charged for face-to-face teaching in a top-ranking Indian institution which is around $25-$35 per hour. This situation raises questions about whether institutions can justify a fee structure predicated and priced on a model of face-to-face contact. Students generally report that campuses of the management institutes are much more than just teaching—experience is also really important. If students are going to miss half of what usually constitutes the student experience, are they really receiving the same value for money? Furthermore, online learning is no substitute for face-to-face classroom.

Imminent recession due to the pandemic will diminish the prospects for MBA employment. For a downgraded student experience and for a downgraded value of the MBA degree; it is going to be difficult for institutions to sustain the same level of fees that they have been charging so far. Weakening of demand coupled with pressure to decrease fees, without any action, management institutes will be forced to make huge cuts, jobs could be lost, and funding for PhDs could be halted. Institutes will begin to look for redundancies and a lot of staff on short-term contracts may be cajoled to go.

Prestigious IIMs are better placed to weather the coming cyclone because they can dig into their corpus or look towards the government to support them, but institutes that fall lower down the ranking tables are vulnerable, especially if non-tuition income forms a big part of their receipts. Much will depend on the depth of the downturn.

Summer internship placements for MBA students in their transition from the previous to the final year and confirmed job-offers for the passing out MBA students have already seen the coal face of impending loom on the careers market in the last 2-months.  Some lost ground can be recovered if institutes are able to restart by September, but any further delay would be a real threat to graduating on time next year.

Many of the MBA institutes are unlikely to survive the pandemic. Others may have to sell their property. This is going to leave a huge impression on the MBA education sector in India and may be in the whole of the world.

(First published on 23 May 2020)

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