Can the Indian School of Business Become a Global Top Five B-School?

Ajit Rangnekar, the mild-mannered dean of the Hyderabad-based Indian School of Business, is eagerly looking forward to April 2012 when India’s premier business school will launch its second campus in Mohali. A big bet for the school, the Mohali campus will mark the beginning of the second chapter of ISB’s unusual story.

In some ways, it will also mark the end of one of the most traumatic years in the short history of the school. The institution saw one of its key founders, former McKinsey & Co. Managing Director Rajat Gupta, become embroiled in a massive insider trading scandal in the U.S. that led to Gupta’s resignation as chairman of the school in March. ISB was Gupta’s brainchild, and it was he who brought the academic brains and the corporate forces together to establish the school in 2001. The same case also claimed another prominent ISB board member, Anil Kumar, who has pleaded guilty to securities fraud.

Rangnekar claims the scandal has had no impact on the school. “The important thing is that not a single one of our most important stakeholders – recruiters, students, incoming faculty – has expressed concern about the ISB as a consequence of that,” he maintains. “We all recognize that these things have happened because of what those people did or didn’t do outside of ISB.”

As if Gupta’s resignation wasn’t enough, it was an earlier scandal that pushed Rangnekar, deputy dean of ISBM from 2003 to 2009, into the dean’s role in January of 2010. The school’s previous head, Mendu Rammohan Rao, had to step down in the wake of an infamous scandal at the IT company Satyam Computer Services, where he was an independent director.

Those were tough times, says Rangnekar. “One day we had a dean and the next day we didn’t have a dean,” he says. “Also, this happened at a time when the economy was in shambles. So was it unpleasant? Absolutely. Was it unfortunate? Totally. But what do you do? You are faced with it, you have to fight it.”

Yet, it’s not an especially auspicious start for a school with the ambition to be among the top five business schools in the world. After a ten-year run, the school still has not been able to attract a highly diverse student population. Only 5.5% of the Class of 2012 is composed of non-Indian passport holders and only 29% of the students are female. What’s more, nearly a third of the students come from the Indian Institutes of Technology alone.

But the class has a respectable median GMAT of 710, and graduates of its one-year business program have done exceptionally well in the job market. This year 310 companies made 661 job offers to ISB’s graduates who pulled down average starting salaries of $121,008, for international positions outside India, roughly 2.3 times their incoming salary. If a graduate stayed in India, the average pay was considerably lower.

The school’s new campus will ramp up student numbers by 200 (the Hyderabad campus has a total enrollment of about 570) and also help ISB break new ground in manufacturing, healthcare, public policy and infrastructure through four institutes specifically focused on these areas. “For a long time, we have been wondering what being relevant to India means,” he says. “We concluded that there are some major national priorities and that’s how we honed in on those four areas.”

The Mohali campus is a crucial project for him. “My biggest priority over the next two to three years is to make Mohali a success,” he says. In many ways, it is an audacious plan. Four leading Indian industrialists have made an initial investment of some $44 million in this new venture and three international schools – MIT Sloan School of Management, the Wharton School and the Fletcher School of Law and Diplomacy at Tufts University – have joined in as academic partners.

  • MBA asp

    I think you will find yourself mistaken about that. I have talked to many students who had multiple admits and chose ISB. Infact why only Stern, people have gone for ISB over Haas/Fuqua/Tuck and that is because the value proposition that ISB offers. Infact, check this article out by an admissions consultant who probably gets the inside news – – he mentions “A lot of Indian students are staying back to join ISB even when they get through to LBS. “

  • ISB_Grad

    And in case people don’w know, this year till day three 360 students were still unplaced, and there is no doubt that more than 200 students would go unplaced. I am not sure what would that contribute to the rankings of ISB.

  • ISB_Grad

    I am a current student at ISB PGP. If the dean of the institute provides this level of reasoning for the fall of rankings, then I am not sure what ranking would ISB hold in another 3-4 years.

    Message from Dean, Ajit Rangnekar, written to ISB community

    “Dear ISB community,

    The ISB has been ranked 34 in the Global MBA rankings 2013
    released by the Financial Times today. This is a painful drop which will, no
    doubt, evoke strong emotions. As the Dean, I share your disappointment, and
    accept the responsibility for this drop.

    We normally explain when things go badly, and take credit
    when things go well. Last year, I chose not to explain, so as not to sound
    defensive, and many of you felt I was ignoring the community. This year,
    therefore, I am giving my initial (and hopefully, objective) analysis. I would
    have preferred to take more time to analyze. I may come back later with a
    better understanding of where things went wrong for us. ISB’s strength is in
    the diversity of the views within its community. I hope that many of you will
    do your own analysis and give me your suggestions of what we can do.

    Before we get into explanations, let me reiterate that I am
    confident the ranking will go up again as soon as the economy improves, and the
    impressive progress of the alumni, which I see every day, will get reflected in
    the rankings. We are an excellent school, and we will continue to provide
    excellent education, continue to invest in Alumni lifelong learning, and high
    quality research.

    Overall, if you see the FT rankings over a three year
    period, the top nine or so schools are relatively stable, while thereafter, the
    rankings fluctuate extensively. CEIBS, for example, has gone from 17 to 24 to
    15, Berkeley Haas from 25 to 12, IIMA’s PGPX from 11 to 26, and we from 13 to
    20 to 34. The year to year changes of this magnitude do not make sense unless
    relatively small differences between the schools cause large variations in
    rankings. FT data itself shows that there are four clear groups in the ranking
    – the top ten, then 11 to 40, 42 to 70, and finally from 72 to 100, and schools
    are closely clustered in every group.

    For us, the overwhelming factors that have affected our
    ranking are the salary levels after three years, and the % salary increases.
    These, together, contribute 40% of the total weight, and we have gone down in
    both these indices. Contrary to what is written in the popular press, the US
    salaries seem to have moved up significantly as per the FT survey, while ours
    have remained stable in rupees (the Chinese salaries have also gone up). For
    ISB, the Class of 2009 (who were surveyed for this ranking) had a tough start,
    and that is reflected in the salary numbers. My rough calculation shows that
    their salary three years out is actually marginally higher in rupees than that
    of the Class of 2008 (well done, Class of 2009). The problem is created by the
    conversion of exchange (or PPP) rate FT has used which has become unfavorable
    by 35% over the last five years (Due to this, for FT, the ISB grad PPP salary
    was USD 155,900 in 2008, and is 123,470 now, inspite of the average salary
    having gone up in Rs). FT has been transparent about this basis; unfortunately
    it has been going against us. The average three year out salary of the Class of
    2009 was therefore computed in FT ranking as 5 % lower than the previous year
    (20% weight). Surprisingly, the salary % increase dropped from 177% to 152%.
    This was always our strongest point in the FT ranking – we used to be the top
    salary increase school. Obviously this drop has hurt us.

    Our larger numbers must have also contributed to some
    lowering of the salary average. The last factor which has contributed, and will
    hurt us even further in future, is our fee level. The Service Tax will erode
    our Value for Money further in the years to come. I am also not happy with our
    research rank. We have started pushing up our research focus more, and with
    more tenured faculty now, we should do better in this area in the future.

    What will we NOT do? We cannot reduce our intake (though we can
    stop expanding for some time) or cut our fees. We will continue to select the
    best students, and give them the best education we can. We have already
    initiated a Curriculum Review to make our students more effective (though our
    focus was not on making a difference to salaries three year out). We will, as I
    said above, expect to do much better on our research score.

    As we analyze the data more, we may come up with other
    things we can do differently. If you have any suggestions, do let me know.

    We are a very young school growing at a fast pace. We have
    been scaling rapidly to meet the growing demand for business leaders in India.
    I continue to believe that this is important from an institutional stand-point,
    as it will lead to the building of a critical mass of ISB Alumni, making more
    impact in the industry. Ultimately, as with any top school, our enduring
    reputation will be built by the success of our alumni, and the contributions of
    our Faculty, and we will continue to invest in alumni lifelong learning, and
    Faculty research.

    While this development is a setback for us, I remain
    confident that this is not a cause for any major course change. As the economy
    picks up, I am sure that we will see an upswing in the ranking in the years to


    – Permanent Faculty; Staff; PGP2013; PGPMAX2012; PGPMAX2013; FPM
    Students 2011; FPM Students 2012

  • Djfrmmumbai

    a simple question, will an Indian who gets admit from a 10th rank US B school say NYU, Stern or 25th ranked B school say NUS and ISB will prefer ISB over the other two, I don’t think so. No doubt India is a huge market, with a population 4 times of US or Europe, India definitely need at least 50 world class b-schools !

  • Top 5?  Not a chance.  Top 50 would be a decent result.  

  • cap

    Global top 5? Not in the near future. The main reason is diversity. ISB attracts the best of India, but not the best of the world. The top candidates from Latvia would never apply to ISB, and I don’t foresee this happening within the next 10 years. India has a lot of the world’s talent, holding a good chunk of the world’s population and all, but India doesn’t hold all of the world’s talent (would be arrogant to think it does). Unless India can begin to attract out of country top candidates, it won’t be a true MBA superpower.

  • I think it’s fair for the AICTE to say that 1 year course cannot be classified as an MBA. Job search starts as early as 3 months after the start of the program. I frankly do not think that the learning gained from a 2 year course can be somehow compressed in a 1 year course. Also within the Indian context, it is so very important to get a job that pays well.

    I am skeptical at how much of students can attend to any sort of research. I can bet that no Indian school of any reach can attain top 10 status unless they have faculty doing solid research. Also, the so called high paying jobs are a direct by-product of the high growth of the Indian economy. I wonder if India does not grow at 8% annually, how will ISB sell its students to the world? As someone mentioned in the post earlier, the administrators themselves have not embraced the leadership style from the western world and hence they cannot compete the western counterparts.

  • S_mitra

    The school has a very poor student diversity! its still a complete a ‘Indian’ school, except that faculties do come from top schools like Kellogg and Wharton. From my personal perspective 80% of the learning one does happens with the ‘international’ fellow students around and 20% from the faculties in class. -S.Mitra HSB’08

  • dipankar

    As some one who is an experienced Indian professional planning to get a business degree, the article offers an unbiased point of view, I believe. However, having attended a few contact programs at this school, it did not appear very diverse in terms of students’ background or profile.

  • AJ

    If the salaries for ISB students getting placed in India is adjusted for PPP, then it would be more or less equal to any top global school, in my opinion.

  • Sudhir Negi

    I’m not sure why only CEO salary has to match in $$.

  • Snigdha Aggarwal

    Interesting to see this article!.. Like this website and its informal yet informative approach to dealing with the subject….

    I have had the good fortune to attend an exec program at the ISB. I for some reason did not connect (maybe I did not understand the scope of the topic, syllabus) with the course on Day 1 of this program. I went and spoke with the concerned officials to just vent my frustration. I was so pleasantly surprised by their attitude and eagerness to solve a problem.

    After hearing me out they deduced that mine was a case of expectation mismatch and they offered to me an opportunity to attend another course of my interest in the future in lieu of this one.

    that is when I realized that not only are these people interested in solving problems but they are also empowered with decision making ability to do the same. I have been recommending the Executive programs to many of my colleagues since then. I have myself been to the ISB after that as a recruiter….

  • aakash

    We as alumnus need to work to increase the geographical diversity of the batch. It is only a matter of time when we are world class on that parameter as well…

    ISB Rocks

  • carolyn

    Hi.. I have met a few students of the ISB in the US. It was a pleasure to interact with them. Nice to see a mention of this new school on this website.

  • Anoop

    As an ’06 alumnus, I think the article is a fair summary of ISB’s evolution. What’s been achieved so far is impressive by any standards, let alone the associated time-frame. Although I would consider the impressive median salary numbers a by-product and not the focal point of the discussion.

    The challenge will continue to remain how to become globally relevant by becoming “The B-school”, to learn business from an emerging markets perspective. I wouldn’t bet against that happening in the next 5 years.

  • dMonkeyMan

    I attended the school a couple years ago. Wow. Please get the facts straight. There were about 570 graduates and the average salary is *not* $120,000 in India. That’s more than what certain CEOs get paid. Most students get an average of 18 lacs a year which would translate to about less than $50,000. There’s a tremendous amount of pride here for ISB, however there needs to be a changing of the guard wherein someone with the right management skills comes over from another respected MBA program and runs the show. Rajat Gupta had the right idea and brought the school to where it is now, but for the next ten years, ISB needs a more experienced leadership team to hire the right staff (Mr. Jain?) and administrators to shake out the bureaucratic people running the show ( including the current Dean ). ISB is a great school, but its current crop of administrators threaten to keep the school at mediocre. How do they expect to attract a diverse international set of students when they, themselves have never embraced the leadership style of international professionals themselves? It was apparent a couple years ago, and nothing has changed since.