2016-06-07_19-01-34

Reasons for decline in number of CAT test takers

MBA enrollment is more or less linked to placements, especially in India. When the global economies are not doing well post 2008 crisis, it will have a percolating effect on the number of people recruited as well as the salary package each one gets impacting the number of Common Admission Test (CAT) takers. The above diagram clearly explains the pattern when there was a dip in number of candidates appearing for CAT, post 2008 crisis. Going forward, we may see further decline in numbers unless the economy picks up.

Having said that, I want to mention about the fee charged by top MBA schools in India. The fee component has seen Compounded Annual Growth Rate (CAGR) of 22% from 2009 to 2015.

When the average salary growth in campus placements is much lower than that of growth of fee, candidates exercise lot of caution. I have seen many instances where people left jobs at Rs. 10.0L~12.0L to join MBA programme and ultimately settle for Rs. 15.0 L package post MBA. For those who are looking at better package and career post MBA, one thumb rule to look at whether to join MBA is that your post MBA salary should be atleast 3x~4x times your pre-MBA salary (Don’t ask me who gave this formula). But for those who are looking at once in a lifetime experience of top MBA school in India, this should not matter.

The decline could also be due to each IIMs coming up with their own criteria for selecting candidates based on academics, work experience, written tests and what not. Slowly, top IIMs are aiming to move towards global standards in terms of student composition and emphasizing more on academics. The number of people who apply for Harvard MBA is a meager 9,000 for approx 1,000 seats. The reason is people know that without having proper credentials if they apply, their application will be rejected. As a way, Harvard Business School is filtering those who are not serious and  focusing their efforts on evaluating few genuine and truly interested candidates.

At the end of the day just like the way industries have business cycles, so is MBA enrollment.

P.S: Recent update – The number of applicants had gone up by 8% for CAT 2015. Is it because of economy growth?