Is the tech bubble bursting? MBAs seem to have a nose for this kind of thing, so a reliable way to find out if Silicon Valley is headed for a downturn is to look at where the top talent is going. Poets&Quants crunched the numbers from the 2016 employment reports of 32 of the elite U.S. and European schools and found a picture that was … mixed, but not overwhelmingly negative.
Of the 28 U.S. and five European schools, 18 showed increases in the numbers of Class of 2016 MBAs going into the tech sector from the year before, and 12 showed decreases. (One school, IESE, had no available numbers for 2015, and another, IE, showed no year-over-year change.) Of the schools showing decreases, the average drop was 4.29%, with six schools showing a decline of 2% or less and only one — Vanderbilt University’s Owen Graduate School of Management — showing a drop of more than five percentage points. In Owen’s case, the decline was 6 points, from 19% of 2015 MBAs taking tech jobs to just 13% in 2016.
On the flip side, the average increase in newly minted MBAs headed into tech was 4.71%, with five schools notching jumps of 5 points or more and nine registering minor increases of 2 points or less. Tech hires surged by 7 percentage points to 22% at Northwestern University’s Kellogg School of Management, and by slightly more than 10 points to 18.7% at another Midwestern school, Indiana’s University’s Kelley School of Business. The biggest year-over-year increases: the University of Notre Dame’s Mendoza College of Business, which had a 16.1-percentage-point increase to 27.1%; and the University of Texas-Austin’s McCombs School of Business, which saw a 16-percentage-point jump to 33%.
LARGEST TECH EMPLOYERS INCLUDE AMAZON, MICROSOFT, GOOGLE & APPLE
Whether up or down, the high tech industry has become a major recruiter of elite MBA talent in recent years. Amazon leads this parade at one school after another, hiring 35 MBAs last year at INSEAD, 34 at Michigan Ross, 23 at both MIT Sloan and Northwestern Kellogg, 19 at Chicago Booth, and a 15 at Duke Fuqua. In the past five years, Amazon has hired nearly as many MBAs (49) from Columbia Business School as Morgan Stanley (51), consistently one of Columbia’s largest employers over many years (see table below).
Only five years ago, Google hired just four MBAs at Chicago Booth. Last year, Google had tripled its Booth hires to a dozen. In 2012, in fact, only one company–Google with those four hires–out of 26 major employers was a tech firm. Today, five of 26 are in tech, with two of the top six in technology. At Kellogg, LinkedIn, Facebook, Dell and Intuit made the list of major employers last year for the first time. At MIT Sloan, where Amazon, Google and Microsoft are among the top nine employers now, MBAs going into the software and Internet industries accounted for 23.9% of the class last year, up from a mere 4.7% in 2012.
It’s also a worldwide phenomenon. At Spain’s IE Business School, the tech industry for the first time become the largest employer of MBAs in 2016, overtaking consulting and finance. “We saw a dramatic upsurge in placements in the technology industry–25% compared to 16% last year–as innovations in the sector consistently generate new roles and functions,” according to IE’s 2016 employment report. In fact, many are using the MBA to transition out of other industries and going into high tech. At IE, for example, only 10% of incoming MBAs hail from technology, though 25% of outgoing MBAs land jobs in the field.
MANY SCHOOLS CONTINUE LOOKING TO THE WEST
McCombs’ home, Austin, is one of the top U.S. tech and innovation hubs. But what explains Mendoza’s sudden emergence as a tech player? Part of it may have to do with the school’s increased interest in the West Coast, including MBA site visits and participation in such events as P&Q‘s Centre Court MBA Festival in San Francisco in June.
Some schools long ago saw the need to travel to the coast to get a sense of the Silicon Valley-Bay Area ecosystem; more and more are following their lead, making such pilgrimages de rigeur for the best programs. One of early pioneers of a West Coast trek was Carnegie Mellon’s Tepper School of Business, which has made such a trip a key part of its MBA coursework for more than 20 years. Tepper, fresh off some good news about the high number of its female MBAs going into tech, saw a dip in its overall numbers in 2016, down nearly 5 points to 33.5%. Still, that’s more than a third, and it’s among the highest percentages of any top B-school.
“The Tepper School’s MBA program provides an ideal education for individuals interested in careers in the technology industry,” Tepper Dean Robert Dammon told P&Q in January. “Our strengths as a school lie at the intersection of business, technology, and advanced analytics. These strengths are reinforced by Carnegie Mellon’s outstanding programs in the STEM fields and the strong campus culture of interdisciplinary collaboration.
“Technology companies recognize the value and relevance of a Tepper School education and target our students for leadership positions within their organizations,” Dammon added, noting that for Class of 2016 MBAs who accepted jobs within the technology industry, common job functions included product management, operations management, general management, marketing, and finance.
THE BIGGEST TECH FACTORY: WASHINGTON’S FOSTER SCHOOL
But while Tepper and other schools look west for tech inspiration, some schools have the advantage of already being there. The University of California-Berkeley’s Haas School of Business sent 38.8% of its Class of 2016 the short trip down the road into tech, a percentage point increase from 2015, and Stanford University’s Graduate School of Business — smack dab in the heart of Silicon Valley — upped its tech output by 5 points, to 33% of its 2016 MBA class.
Yet neither of those schools — nor even another elite California school, UCLA’s Anderson School of Management (28.3%) — can compete with the University of Washington. Based in Seattle, the Foster School of Business is the only elite B-school to send more than half (52%) of its MBAs into the tech sector, and that’s after a 9-point jump from 2015. Foster shares a home with one of the biggest employers of MBAs in the world, Amazon. Though numbers for 2016 Foster MBAs aren’t yet available, it’s safe to say Amazon didn’t forget about the tech factory in its backyard.
In the grand scheme, of course, Foster had just 105 MBAs in Class of 2016, so we’re talking 53 or 54 going into tech — not a huge number. Compare that to the one-third of Stanford’s 825-member MBA class that year, which yielded about 272 tech employees. Or the 95 Berkeley Haas MBAs who went into tech. Or the 119 MIT Sloan School of Management MBAs who represented 29.3% of their graduating class — biggest bloc on the East Coast.
NUMBER OF MBA HIRES BY LEADING TECH FIRMS IN THE PAST FIVE YEARS
Source: Business school employment reports
(See the next page for a list of the 32 top schools for tech industry jobs in 2016, as well as base salary and sign-on bonus figures.)