The US investment banking crisis, compounded by the Lehman bankruptcy impact, is leaving its mark on the psyche of Indian B-school managements and students. Even the premier Indian Institutes of Management (IIMs) now expect a dip of around 15-20 per cent in the average salary levels, besides a drop in the international job offers on the campus for the 2009 batch.
“Foreign companies pay in foreign currencies, but with most of the international offers coming from investment banks the offers and salary levels are set to see a dip this placement season,” reasons a placement chairperson from one of the IIMs. He, however, is optimistic that international companies from the manufacturing sector have shown interest in recruiting students from the campus.
At the Faculty of Management Studies, Delhi, the institute expects it could face problem with lateral placements. The institute has already approached 15-20 new companies (which did not come on campus last year for recruitment) this year. Professor Madhu Vij, Corporate Relation and Placement Advisor, FMS, reasons: “One job in the BFSI sector creates four other jobs. It is a wait and watch time for the laterals. We expect that the profiles offered might be different and the salaries may be lower. Till now, 80-90 per cent of the companies are same as last year but for safekeepng, we have approached new companies with lesser exposure to the international market.” Sriharsha, a student at FMS, says that students with dual specialisations can opt for marketing and HR and the options in IT are likely to go down in lieu of the turmoil in the US market.
“The Indian market and economy seem still as attractive as last year and we expect more domestic companies to recruit students from the top-tier B-schools as international companies take a back seat. There could possibly be a reduced growth rate in the salaries offered, but we expect an increase in Pre-Placement Offers (PPOs) this year,” says Naveen Urmese, second year Post Graduate Diploma in Management at Xavier Institute of Management, Bhubaneswar (XIMB).
B-schools are now finding immense potential in consumer banking, retail, consulting, consumer durables and private equity, which are more viable career options than an I-bank. “Unlike around 40 per cent students from our institute taking up jobs at investment banks every year, this year the numbers will be drastically low since the requirement of manpower has gone down at I-banks.
Sectors like consumer durables, marketing, retail and consulting will get a big fillip this year,” says Madhusudan Karmarkar, area chair for finance at Indian Institute of Management, Lucknow (IIM-L).
“The US financial market is a challenge to the aspirations of B-school students currently. Some look up to these institutions as great places to work in. However, cycles come and go, and we need to have a long-term vision of such incidents.
Opportunities are now arising in the Asian financial markets. The fundamentals of Asia and India remain strong; they are the engines of growth driving the world economy forward,” says Devesh Dhar Dwivedi, from Indian School of Business (ISB).
The Lehmann and Merril Lynch debacle have certainly become a topic of discussion among students at management institutes. “There have been informal discussions going on during every class at the campus since the Lehman debacle. Of course, there are concerns, but there is no such panic among the students of finance,” says Pratik Ved, student co-ordinator at IIM, Ahmedabad (IIM-A).
The premier institute of the country states that the events are not conclusive in nature and their impact on future hiring is uncertain at this stage. “We are not currently in a position to make a strong statement on how we believe these events are likely to impact us. IIM-A has a large and diverse pool of recruiters and therefore, the status of a few firms is unlikely to impact the opportunities that IIM-A students can expect from our placement process.
Our student pool is also quite diverse and students looking for a long-term career in finance continue to have a preference for the sector as they are unlikely to base a long term career decision on a short-term view of the market,” says Mihir Lal, placement co-ordinator, IIM-A.
Interestingly, the volatile state of the financial markets across the globe owing to sub-prime crisis, the soaring inflation rates, interestrates and rising crude oil prices has found its way into a case-study by Jamnalal Bajaj Institute of Management Studies (JBIMS), Mumbai. “The finance club at JBIMS is planning to take up a case study on the Lehmann and Merril Lynch debacle in its ongoing series on ‘How lenient lending can turn into a bane rather than a boon’.
Most of the students are viewing the current downturn as a short term lull in the market and are expecting a recovery by the end of the year. This year, placements at JBIMS would range from niche profiles such as infrastructure advisory to conventional banking,” says Rahul Lachchhiramka, corporate relations committe at JBIMS.
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