So how will Placements 2015 look like: Assuming CAT takers of 2012

Each year, over 200,000 aspirants in India take up the Common-entrance-test or CAT to be eligible for applying to some of the best management institutions in the country.

What have been the trends that are important and related to the growth of management education in India?

- More IIMs: there are 13 of them and probably more would open soon

- All IITs, NITs, and FMS - institutions that were taking other/own entrance tests are now taking scores from CAT for selection purposes

- Multiple campuses of other private institutions (IMT, NMIMS, IMI, etc) and increase in the intake of other b-schools like S.P Jain

- Maturity of the market forces, wherein MBA is now a more focused and proper decision and not any longer the natural step after engineering or graduation

I would like to separately mention another factor adding to the above list - that of the economic conditions and its relevant effects in businesses and organizations who used to be the star recruiters in many b-school campuses.

A sound mind will always ask a question - Is there something wrong with management education model as a whole, and how can we look at forecasting whats probably going to happen for all the passing-out grads in the coming years?

The answer to whether the MBA education model is passe now is - NO. Definitely it no longer represents the growth story of education sector in India any more, but it still re-produces some good talent into the corporate sphere, contributing to the sustainable growth in various sectors. There has been a obvious change of perception and people taking up management education have now accepted the hard realities - that one doesn't come out of an MBA college and buy a Ferrari. Is there a better option other than MBA for creating industry ready professionals? I don't think the outdated undergrad programs are anywhere near to answer that question/problem.

So can we forecast atleast, to ensure that we know what would happen to the grads passing out of MBA/management institutions in the coming years? How will placements 2015 be if we consider profile of people taking up CAT 2012? The following math attempts to answer these questions

Let us consider that in the present economic scenario, it will take more than 8-10 years to see brilliant growth across the world economies (even that's a big Bet and being nonsensically bullish), not much will change in the next 5-7 years, in terms of job opportunities and job-designs available for MBA grads (I am not only taking the top 10 or 20 b-schools, but also the major chunk of good b-schools in India)

To calculate the probabilities, I will be using the Bayes theorem (for multiple probabilities attached in this case)

Formula:
P(A1 | B) = [P(A1)* P(B|A1)]/[[P(A1)*P(B|A1)] x [P(A2)*P(B|A2)]]

Let's define each probability:

P(A1) - Probability of more freshers getting offers

P(A2) - Probability of more work-exp people getting offers

P(B|A1) - Probability of Economic Slowdown/Job-Market Slowdown when there is a probability of more freshers getting jobs

P(B|A2) - Probability of Eco-slowdown when there is a probability of more job offers for people with prior work-ex

The rough segmentation of Freshers:Work-ex for CAT 2011 was about 30:70

Which also would be the representation across the better b-schools around the country.

Let us consider the batch-composition as the ultimate factor to calculate the probabilities of more freshers or work-ex people getting offers.

Therefore,

P(A1) for people who took CAT 2011 will be - 30%

P(A2) will be - 70%

Let us assume that when there are more freshers who get offers, the probability of economic slowdown will be less, and more for the situation wherein the work-ex population get more offers.

Which means,

P(B|A1) - 20%

P(B|A2) - 80%

So, the probability of more freshers jobs when there is a consistent probability of economic slowdown expected over the next 4-5 years, will be denoted by P(A1|B)

Therefore,

P(A1|B) = (0.3*0.2)/[(0.3*0.2) + (0.7*0.8)]

= 9.6%

Case 2:
Let's now consider that for CAT 2011, there were 70% freshers and 30% work-ex aspirants, thereby changing the P(A1) and P(A2) respectively, keeping the probabilities of "B" for A1 and A2 consistent.

So the new P(A1|B) = (0.7*0.2)/[(0.7*0.2)+(0.3*0.8)]

= 38.8%

So the math tells us that there wont be good amount of jobs designed for freshers available to MBA grads in the coming years (About 10% probability), considering that about 70% of CAT applicants will have prior work ex.

The above is only an indicator. There is bound to be argument that this calculation at best throws out only the probability, and hasn't considered other factors like - industry requirements, innovations across certain industry and the speed of the same, technological advancement and its affect on irreversible losses of various job designs, etc. The good thing is that the scope to calculate proper trends and probabilities for this can only improve from here.