Mapping the Indian Business Student Boom

Demand for business education among Indian students is still growing, but U.S. share and historical advantage appear to be slipping.
October 2, 2007

The number of applications to business schools from citizens of India continues to rapidly increase – a phenomenon that may mask the fact that American business schools are actually getting a smaller share of applicants these days as business education expands worldwide.

“Between 2002 and now, there’s just been an explosion in the number of Indians who have chosen to go to business school,” said David A. Wilson, president and chief executive officer of the Graduate Management Admission Council, which offers the Graduate Management Admission Test (GMAT).

“If you look at the Indian companies that have just grown, with that growth and entrepreneurial spirit has been a demand for financial skills. With that comes a demand for graduate study in business.”

Students from India -- the number one country in terms of sending international students to the United States over all -- seem to be applying to business schools worldwide in ever-increasing numbers, as measured at least by GMAT test takers. In 2005-6, 9,222 aspiring business students who identified themselves as Indian citizens took the GMAT, a figure that jumped to 13,324 one year later.

And even with these quantum leaps in quantity, quality has stayed fairly consistent, and is even increasing: The mean GMAT scores for Indian citizens from 2000 to 2006 were 556, 557, 556, 560, 560 and 572, respectively (Average scores for U.S. citizens in that time frame ranged from 519 to 525, for comparison’s sake).

And, more generally speaking, international student applications to American business schools increased by 15 percent from 2006 to 2007, with offers of admission increasing by 10 percent, according to data from the Council of Graduate Schools.

But while the raw number of applications sent by Indian students to American business schools has been increasing -- the number of GMAT scores sent to American schools by Indian citizens, the biggest group aside from Americans to take the test, has climbed from about 52,100 in 2002 to about 53,200 in 2006 -- those statistics alone don't reveal the whole picture. Despite the growth, American business schools have actually lost market share relative to Indian and European schools, according to the Graduate Management Admission Council’s Asian Geographic Trend Report for Examinees Taking the Graduate Management Admission Test (2002-2006).

The proportion of score reports that Indian citizens sent to American business schools decreased by about 13 percentage points, from 84.74 to 71.47 percent in that time, while the percentage of scores sent to European business schools climbed from 6.74 percent in 2002 to 9.42 percent in 2006. Meanwhile, the percentage of Indian citizens sending GMAT scores to Indian schools increased from 2.85 to 8.96 percent.

"Students have had alternatives within their country that they never had before," said the GMAC's Wilson. The Indian School of Business,” for example, Wilson said, “is a world-class institution that’s [about] five years old."

“Globally, business schools are growing,” said Judy D. Olian, dean of the University of California at Los Angeles' Anderson School of Management and chair of the board of directors for AACSB International -- The Association to Advance Collegiate Schools of Business (AACSB). The Anderson School saw its number of Indian applicants swell from 166 in 2004 to 295 in 2007, although the number of Indian students enrolled has stayed fairly steady, falling from 11 in 2004 to 8 in 2007, with a peak of 14 in 2005.

China, India and Russia, for example, “represent large growth areas for business schools," Olian said. "What that has meant is that the flow of applicants is no longer uni-directional."

“The U.S. really became the leader in business schools beginning in the 1800s,” said John J. Fernandes, president and chief executive officer at AACSB. Now, though, “these good business schools emerging around the world are giving more of a choice, not just to Indians, but to Chinese, or to [students from] any country where the number of quality business schools is too small to absorb the number of quality business students. That’s certainly true in India.”

Not only that, but American business schools have brought their training to India, serving students close to home without the visa complications that only got more complicated after September 11 (leading to declines in international students all around). Virginia Tech's Pamplin College of Business is only now back to its pre-September 11 enrollments of Indian students at its Blacksburg campus, but the master's in information technology it offers in Mumbai is thriving, said the dean, Richard E. Sorensen, a past chair of the AACSB. A new cohort of 65 students just started -- selected out of an applicant pool of 1,500.

With such a large pool looking for quality programs, the nation's most elite business schools probably have little to worry about when it comes to maintaining their ability to recruit top students, Fernandes said. At Dartmouth College’s Tuck School of Business, for instance, a recruiting-oriented “India Initiative” has helped increase applicants from and enrollments of Indian students. In 2004, the Tuck School had 117 applicants from Indian citizens; this year, they had 498, the dean, Paul Danos, said. The school of about 500 had about 12 Indian enrollees in 2004, compared to 28 this year.

“We’re so mature in our business education that we don’t grow that much, but it’s going to take decades for other economies to catch up, because we just have hundreds and hundreds of business schools,” Danos said of American business education.

In the meantime, Indian students originally trained in highly technical areas or engineering are putting business education in such high demand, Danos said. “They’ve invested so much in the last 20 years in technical education that there are a lot of highly educated individuals that are ready for general management training, too.”


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