Going global

Controversy surrounds IIM’s first offshore venture as its Singapore campus is set to open

Ranjit Bhushan Delhi

India’s first offshore business management course plans to operate from a mere 4,700 square feet area located in Singapore’s upmarket Mei Chen Road with classes held only in the evenings.

That is what Brand IIM’s first overseas venture proposes to have. Much after heat and dust had settled down about India’s premier management institute wanting to open up a branch in Singapore and subsequent units elsewhere, the IIM-Bangalore has submitted a detailed proposal to the Ministry of Human Resource Development (HRD) about its Singapore initiative. To begin with, IIM-B, as it will be called, will offer two programmes – a two-year part-time MBA and executive education for senior and middle-level executives. The part time MBA will involve 12 to 15 modules, with classes held during evenings between 7 pm and 10 pm.

But despite the decision of the govemment to allow the IIM to go ahead with its ventures abroad, several questions still remain unclear. Critics of the move question whether the London School of Economics would open branches in India? The answer would have to be a resounding no. Then why should IIM’s – India’s torch -bearer in the world for churning out world class corporate executives – be allowed to go outside the country where there itself is a great demand for quality management studies.

The genesis of the spat lies in the Memorandum of Association (MoA) signed in 1973 when the Indian Institute of Management came into being. The MoA then did not include any clause about expanding its activities outside the country – presumably no one then visualised how big these institutes would become. That was the line taken by HRD Minister Arjun Singh when the IIM first made its approach on opening up a branch in Singapore. After turning down the proposal in early February 2006, Singh had to rescind from his earlier decision. According to IIM Bangalore Director Parkash G. Apte the HRD Ministry had now agreed to the process of IIM-B amending the MoA for expanding its activities outside the country. Not just IIM-B, but the entire Board was unanimous on the decision.

According to political observers, there is no doubt that Arjun Singh came under tremendous pressure to capitulate. Apart from the crescendo that emerged from corporate hotshots and former IIM alumnae across the globe, no less then the President of India, A.P.J. Abdul Kalam, backed the IIM-B initiative. Others were equally vociferous. From Mukesh Ambani, who is on the Board of Governors of IIM-B, to other CEO’s, it appeared blasphemous not to allow the IIM to expand outside the country. After all, they argued, IIM-B was in 2003 listed as one of the top 100 business schools in the world.

IIMs resent the fact they have not been allowed to take wings, even though the demand for ‘Brand IIM’ abroad is growing. Dubai, China, Egypt and some South East Asian countries are eager to host IIM campuses on their soil. The government, they allege, is blind to the prospects of the equity that IIM’s could bring to ‘Brand India’.

There are two questions that beg answers here. One, just how much autonomy do IIMs actually enjoy? Two, given India’s massive domestic demand for quality management institutes, can we afford to let out our best management teachers out of the country? On the question of autonomy, there is little doubt that the government controls the strings. Witness, the rising decibel levels over the question of reservation in educational institutes like the IIM. Already there is an outcry over compromising excellence in favour of political expediency and its long term impact. There is little doubt that should the UPA government finally decides to go ahead with reservations, there is little that the IIMs can do to stop it. As Arjun Singh says, IIMs are not merely companies floated by anyone  but would have to abide by the rules. In the regime of Murli Manohar Joshi as HRD minister in the NDA government, the IIM-Ahmedabad was put up to a fair amount of bullying by his Ministry, again over the issue of autonomy and independent functioning.

Secondly, and the more important question at stake is that IIMs are perpetually short of staff, an issue that has not been sufficiently highlighted. According to one estimate, IIMs may have a staff shortage of as high as 40 percent. Educationists lament the fact the average management institute in India – and there are scores of them – have failed to make a mark primarily because they lack quality teachers. You can have the best campuses and the most state-of - art teaching aids, but there can be no substitute for class teachers and most management institute lack this critical resource component. So the issue is that with such a shortage of management faculty here, can we afford to send them abroad, particularly to Singapore, which has strict employment rules for hiring foreigners?

Contrasted against this are the plans that IIM- B has submitted to the HRD Ministry, Each module will involve one faculty member staying in Singapore to deliver the module for two working weeks. The fee  will be Rs7.8 lakhs (30,000 Singapore Dollars) while executive education will be offered at $ 1000 per partcipant a day. The proposal has also projected high revenue from the Singapore operations. In the first three years,

IIM-B will earn Rs 47 crore. Admissions will be based both on CAT and GMAT. The classes, which are expected to begin next year, makes it mandatory for candidates to have a three-year work experience, with a degree or equivalent qualification from a university recognised by the Singapore government. By June this year, the MoA would have been amended to set the whole process in motion.

There are some other crucial fallouts of the system. If the IIMs are allowed to open campuses overseas, will the IIT’s and other professional institutions be far behind? The IIT Bombay has tied up with the National University of Singapore, which paves the way for the former to the offer M Tech courses to students in Singapore. HRD officials say they are now flooded with applications from foreign universities looking for Indian tie-ups. Other IITs and IIMs are working on similar plans. Singapore’s Economic Development Board, a nodal agency for facilitating the entry of prestigious foreign institutions of higher learning into the Singapore educational hub, has vowed to keep up their engagements not just with the IIM-B, but all other interested institutes. Maybe, if the UPA government does introduce reservation into educational institutes, such foreign tie-ups could help in absorbing the vertical expansion of India’s freshly graduated management executives.