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Interest in MBA continues to drop worldwide, even as applications to specialized management programs rise

With interest in fulltime MBA at an all-time low, the 2010-11 admission season might have been the easiest in recent times to make it to an MBA program internationally.

According to a survey of application trends at GMAT-affiliated b-schools by the Graduate Management Admission Council (GMAC), an increasing number of MBA programs worldwide reported a drop in applications in 2010-11 compared to 2009-10.

The two-year MBA programs were the worst hit. More than two-thirds of two-year fulltime MBA programs witnessed a drop in applications, compared to 49% 2009-10. Whereas 57% of one-year fulltime MBA programs received fewer applications in 2010-11 compared to 2009-10.

Application numbers to fulltime MBA programs have been diminishing since 2009, after the all-time high of 2008.

“Applications to two-year fulltime programs are coming off historic highs in 2008. In the beginning of the economic recession, people are more likely to go back to school to retool and be ready for when the economy rebounds. But in this prolonged downturn, people are much more hesitant to leave their jobs and go back to school because they are unsure if they will be able to renter the workforce at the right level when they graduate. The improvement on the economic front has been patchy and in the absence of a clear trend towards recovery, candidates are hesitating to commit to the time and cost commitment of a two year full time MBA program,” Ashish Bhardwaj, Director of GMAC’s South Asia region told PaGaLGuY.

India’s domestic b-school market — which otherwise tends to work differently from the international market — too has showed a similar trend in 2010 with the Common Admission Test (CAT) 2010 takers reducing by 14% to 2.04 lakhs. While the domestic market might revive in 2011 with a possibly increased number of CAT 2011 candidates — fueled also by more number of b-schools accepting the test’s score — there is little reason to believe that the international market will improve. The US and Europe economies aren’t showing recovery signs yet and that is making applicants to international b-schools stick to their jobs.

Even though applications to fulltime MBA programs worldwide have been plummeting, the diversity of the fulltime MBA applicant pool increased. International applicants comprised 53% of the pool.

International applicant pools to two-year fulltime programs continued to be dominated by Indians. As many as 61% of two-year MBA programs across the world reported India to be their top source of international talent, followed by China. Also, 39% of programs reported that India was their fastest growing source of foreign applicants.

At the same time, two-year MBA programs also traced the largest drop in international applications to India. You can imagine the Indian student footprint at these schools by noticing that despite the drop, India’s domination continued.

GMAC attributes to the drop in Indian applicants to the Indian tendency of looking at the ‘financial investment in a management program’ and ‘Return on Investment’ as top concerns when considering graduate management education. “Given the overall economic environment and the lack of certainty around post-graduation career prospects, these two factors could be factors playing more strongly in the decision of Indian candidates,” said Mr Bhardwaj.

Applicants from the Asia-Pacific region constituted 57% of international volumes at two-year fulltime MBA programs in the USA. GMAC attributes this to the fact that b-schools conduct the maximum international marketing and outreach activities in the Asia-Pacific region. In GMAC’s own virtual MBA fair which it shall conduct on September 19 and 20, 2011, New Delhi and Beijing constitute two of the five advertised time zones with the other three being New York, Los Angeles and London.

Although the allure of fulltime MBA is decreasing, applications to specialized management programs such as Master in Management, Master of Accounting and Master of Finance have however been on the rise. Internationally, Master of Finance programs led the trend with 83% programs reporting an increase in applications, followed by Master in Management programs at 69% and Master of Accounting programs at 51%.

Applicants to these programs tend to be younger — often they are fresh out of undergraduate school and have none or little work experience.

So what does the big picture really look like?

Those with four years or more work experience don’t trust the economy to improve enough anytime soon for them to risk investing in a fulltime MBA program, which is leading to an overall drop in applications to two-year and one-year MBA programs worldwide. The younger and freshly graduated folks, however are increasingly applying to Master of Management, Master of Accounting and Master of Finance courses.

The survey results are based on application data from 649 GMAT-affiliated graduate management programs across the world including 117 two-year fulltime and 82 one-year fulltime programs. From India, three GMAT-affiliated b-schools were surveyed. View the entire survey results here.

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