PSU executives queue up for MBAs

An MBA is no longer a cherished degree for only professionals from the private sector. An increasing number of employees from state-owned undertakings are enrolling for the degree to hone their managerial acumen, gain global exposure and fast track their career, which would have taken much longer in the public sector. In fact for most, it is a passport to move out of public sector undertakings (PSUs) to private corporations or consulting firms.

Top business schools like the Indian Institutes of Management (IIM), Indian School of Business (ISB), SP Jain Institute of Management and Research (SPJIMR), Narsee Monjee Institute of Management Studies (NMIMS University), and IIT Bombay’s Shailesh J Mehta School of Management (SJMSOM), have been witnessing significant enrolment from students with work experience in PSUs or the government sector in MBA programmes in recent times.

Public sector professionals, with two to five years of work experience, usually have exposure to large-sized projects and an MBA degree opens up for them a wider array of options in the private sector or allied industries in consulting. IIM Bangalore’s flagship post-graduate programme has 38 professionals from the government sector in the class of 2012-14 with a batch size of 377, up from 28 in the class of 2011-13, with a batch size of 382.

“Predominantly, these professionals are coming here to come out of the sector,” says professor Sankarshan Basu, chairperson, career development services at the institute. The professionals usually join the government sector from engineering campuses, but in just a few years, get frustrated at the lack of growth opportunities, he explains. “They feel an MBA degree can fetch them more glamorous roles in the corporate world, and a better remuneration,” adds Basu.

ISB’s Class of 2014 has 33 students from PSUs or government organisations, compared with 20 in Class of 2013 and seven in the Class of 2012. At SPJMIR, the PGP class of 2012-14 has 14 students from PSU sector, compared with 11 in the class of 2011-13. On an average, 7% to 8% of the PGP class over the past three years has comprised professionals from the public sector. At NMIMS, the MBA class of 2012-14 has five students from the PSU sector, compared with four in 2011-13 and two in the previous batch. Prior to this, it was hardly a trend.

“A management degree changes their entire career path. It fast-tracks their career and in the long term, they can contribute much better. It gives them crossfunctional and global exposure and trains them for long-term leadership,” says Atish Chattopadhyay, professor of marketing and deputy director of the two-year PGDM programme at SPJIMR.

At IIM Lucknow, the class of 2012-14 has 45 professionals from the government sector in a batch size of 450, up from 40 in the class of 2011-13 with a batch size of 420. Most students attribute the reasons for opting for an MBA to the slow growth opportunities in PSUs, where reaching a manager level could take them more than five to six years. Kranthi Kumar Nukathoti, former assistant design engineer at MECON, is one of them.

Nukathoti cites the lack of growth and low remuneration as factors for pursuing an MBA. He hopes to get into supply chain operations at any of the big private manufacturing majors after completing his MBA. One of the key reasons for professionals from PSUs joining SPJIMR is because of its focused specialisation in operations management, according to Chattopadhyay.

A chunk of the students from PSUs want global exposure, which the institute makes possible through its tie-up with Michigan State University in supply chain management and Purdue University in manufacturing and operations. Institutes like SJMSOM have a significant number of engineering professionals from the core sector and heavy industry PSUs coming for an MBA.

According to VK Menon, senior director, career and admissions at ISB: “An MBA degree gives them agreater choice of options and quick learning. Professionals from PSUs or government who join our MBA course get an opportunity to utilise the skills they have learnt and explore new fields.”

It’s a win-win situation as these people bring in diversity to the class and a perspective of the government sector to the rest of the students. “The exposure these people get in PSU units is large-scale,” says Menon. Adds Varsha Parab, director administration and in-charge registrar at NMIMS: “These students bring in governmental perspective to other students, which is required when they go into the corporate sector.”

Moreover, when these professionals join the private sector or consulting firms, they bring with them the skill sets and depth of understanding gained from working on big projects – a gain from the company perspective as well.

Source: The Economic Times, May 31, 2013

Plan panel asks PSUs to set up education hubs under CSR

In a move to boost higher education in the country, the Planning Commission has mooted the idea of public sector units (PSUs) setting up higher education hubs as part of their corporate social responsibility (CSR). The move will help the government in achieving its target of increasing the gross enrollment ratio (GER) to 20% by 2017 and 25% by 2022.

“We are exploring the idea and PSUs are keen to support such activities of the government. They are on board as they recognise that investing in higher education is not only CSR but also for their future,” said a Planning Commission official. PSUs spend almost Rs. 1,400 crore (Rs. 14 billion) as part of their CSR.

As per the commission, health and education received less than projected expenditure in the 11th Five Year Plan and hence, allocations for these sectors will have to be increased in the 12th Plan. “Health, education and skill development together in the Centre’s plan will have to be raised by at least 1.2 percentage point of GDP… Use of PPP must be encouraged,” it says.

In the 12th Plan period, the commission is targeting an additional enrollment of 10 million in higher education, equivalent to 3 million additional seats for each age cohort entering the higher education system. This would significantly increase the GER bringing it broadly in line with the global average.

About 18% of all government education spending or about 1.12% of GDP is spent on higher education today. According to the commission, this should be raised to 25% and 1.5% respectively. An increase of 0.38% of GDP means an additional allocation of about Rs. 25,000 crore (Rs. 250 billion) to higher education for the centre and the states taken together. “It is tough to set up an education hub and modalities related to the revenue model, returns on investment and land are to be worked out,” the Planning Commission official added.

However, the industry is apprehensive of this move and wants PSUs to budget this exercise in their human resource (HR) grants for better outcomes and accountability. “If the programme becomes a part of CSR, then it will only be a one-time aid. We want PSUs to include it in their HR policy so that they become stakeholders and are more involved,” said a CII official who is deliberating the matter with the government. The capital cost of setting up an institute is Rs. 50 crore (Rs. 500 million) which is the initial cost but the operational cost including salaries is greater.

Incidentally, the Ministry of Human Resource Development (MHRD) is unaware of this idea though it supports the setting up of more institutes. “We welcome any move to increase GER but creating an ecosystem for education involves investment and land,” said the ministry official.

Source: The Financial Express, January 5, 2012

B-school students write off govt firms in good times

Public sector undertakings (PSUs), which helped business schools ensure good placements in the last two years, are getting a raw treatment this year. PSUs say with the economy back on track, the students are preferring private sector companies due to fatter pay packets. PSUs and nationalised banks, with their conservative salary structures, are losing out.

“The private sector increasingly made its presence felt this year, unlike the previous two years, when it was playing safe. PSUs and nationalised banks have been unable to compete on compensation,” said Prakash Pathak, Chairperson (Placements), Institute of Management Technology (IMT), Ghaziabad. In 2010, around 20 public sector companies visited IMT. This year, the number is seven.

While PSU banks such as Central Bank of India and Oriental Bank of Commerce are offering students Rs. 5-600,000 per annum, private banks like Citibank, Axis, ICICI and HDFC are paying over Rs. 1 million per annum.

The numbers are starker for Indian Institute of Management, Bangalore (IIM-B). In 2008-09, seven PSUs made 24 offers. This year, two PSUs have made two offers. Five PSUs offered 16 jobs last year. “Not only are PSUs and nationalised banks reducing recruitment, the students’ preferences are also shifting towards the private sector,” said Sapna Agrawal, Head – Career Development, IIM-B.

PSUs such as Bharat Petroleum Corporation, Hindustan Petroleum Corporation, GAIL, IOCL, NTPC, SBI Cap, SIDBI, SEBI, United Bank of India and Union Bank of India, which picked up the highest number of students from IIM-Ahmedabad (IIM-A) in 2009, have recruited from other B-schools in good numbers this year. M.V. Nair, Chairman & Managing Director, Union Bank of India, said, “Now that the economy is picking up, we have not been able to pick up as many students from IIMs. They are preferring private sector companies.”

In 2009, PSUs and banks made good the gap left by the private sector due to economic slowdown. B-schools saw a 20-50 per cent increase in government companies visiting campuses. They recruited 40 students from IIM-A this year, with Union Bank among the top recruiters.

At Mumbai’s Jamnalal Bajaj Institute of Management Studies (JBIMS), only the Reserve Bank of India and Union Bank of India took part in final placements this year. In 2009, the institute was visited by 18 PSUs. Bank of Baroda, GAIL, ONGC, HPCL, SEBI, NISM and Union Bank of India were among the major PSU recruiters. About 17 per cent of the batch preferred to work with PSUs. In 2010, only four PSU came, according to the institute’s website. “We invited companies depending on student preferences. Many of them want to work with private sector companies,” said a JBIMS placement committee member. B-schools said PSUs would do well to go the private sector way.

“While PSU compensation packages may not be higher than those in the private sector, they tend to fail in terms of presentation. Private companies, on their part, make their packages lucrative by presenting them well to students. Moreover, this year there has been an increased inclination among students towards the private sector,” said a placement committee member at Xavier’s Institute of Management, Bhubaneswar.

Source: Business Standard, May 11, 2011

Government enterprises urged to share 2% of profit to boost education

The government wants large public sector companies to share the burden of boosting expenditure on education. The Ministry of Human Resource Development (MHRD) has written to India’s largest public sector units (PSUs), proposing that they part with a portion of their annual profit to raise the standard of school education, particularly in rural areas and urban slums.

“Initially, we have written to top 100 PSUs, including leading government banks, for giving nearly 2% of their profit for improving school education as part of their social responsibility,” a ministry official said. “We are in consultation with private industry lobbies and will soon write to private companies on this.”

Another MHRD official said the ministry was hopeful the companies would cooperate. “Diverting a small portion of the substantial profit towards school education would help in achieving the objective of providing affordable yet quality schooling to children of rural areas and urban slums…” Both officials asked not to be named.

Total net profit of all PSUs in 2007-08 was Rs. 90,000 crore (Rs. 900 billion), according to the MHRD. India’s top 500 companies earned a net profit of Rs. 250,000 (Rs. 2500 billion) in the same year.

The Congress-led Union government plans to boost public expenditure on education from around 4% of the gross domestic product (GDP) today to 6% in the next few years, according to the MHRD. Around 237 million students are currently pursuing school education in India. But quality of schooling and high drop-out rates are major worries. Of every 100 students that enter class I, more han 55 drop out by the time they reach class X.

Currently, the cost of setting up a quality school is Rs. 3 crore (Rs. 30 million, but this may increase to Rs. 5 crore (Rs. 50 million) if better facilities are provided, according to MHRD estimates. Companies that accept the government’s proposal will be asked to fund the setting up of a school as well as its recurring cost for a decade, or a total of Rs. 15 crore (Rs. 150 million). In return, the school may be named after the company and around 10% of its seats may be reserved for children of he company’s employees.

“While up to 10% can go as discretionary quota, the remaining seats will be filled by the government,” said the second official cited above. Having schools named after them will serve as publicity for the companies. The companies can also play an active role in the management and evaluation of the schools they finance. If they don’t want to, the government will hand over the task to the Kendriya Vidyalaya Sangathan, which runs Central Schools, and Navodaya Vidyalaya Samiti, another MHRD-run schooling body. After 10 years, the company can either continue running the school or hand it over to the government.

U.D. Choubey, Director General of Standing Conference of Public Enterprises (SCOPE), an umbrella body of PSUs, said PSUs should contribute to school education as a social responsibility. “They are (already) doing various activities, including those in he education sector,” he said. “MHRD should enter into specific agreements with individual PSUs for this.”

Source: Mint, November 4, 2010