Business schools preferring well established firms over startups

Even as India’s top B-school graduates, in the last few years, have been seen rushing towards e-commerce firms and start-ups, the Indian Express has reported that as of now business school co-ordinators and even some graduates, in a change of trend are saying they prefer well-established firms for placements over start-ups for the advantages of low risk and stability. This is because most e-businesses end up in failure, leaving their hired graduates unemployed.

This is a big change from last year when, the Economic Times had reported that one in every nine students from the 2013-15 batch across 11 top B-schools, had preferred to join an e-commerce firm or a startup after graduation. This was a major jump from the one in nineteen statistic of the 2012-14 batch.

Interestingly, even the offers from e-commerce and startups had gone up by 120 % over the past one year. Companies like Alibaba, recruited 100 students across B-schools at packages between Rs 16 lakh and Rs 20 lakh for the profile of operations, merchant acquisitions, and product management. Other startups too offered good money, challenging roles and SOPs.

High tech success stories such as that of Uber and Airbnb, big-ticket fund-raising (Snapdeal, Flipkart raised $3 billion in funding) and an increasing cool quotient among students, all contributed to this surge in placements in e-firms.

The e-commerce industry had become the hottest, new trend and a booming job magnet. The start-up revolution was in full swing, spearheaded by entrepreneurs employing technology that was changing the way business was being carried out right from fashion to finance. Start-ups funded by venture capitalists and geared for growth tempted the brightest business graduates everywhere. Young, new MBAs ditched established firms and corporate placements for little-known enterprises.

The reasons for joining start-ups were many and reflected the shifting attitudes of the new generation to work and the workplace.

Graduates sought an exciting, fast-paced and cutting-edge business experience. Flexibility of working hours, freedom, more responsibility, easier interactions with seniors, lateral movement, recognition for one’s work, enormous opportunities for learning, home atmosphere, no dress code, the cool quotient, less politics, growing along with the company, far more impact and responsibility, greater job satisfaction compared with large corporations, the dream that the start up would take off big, are only a few of the hundreds of reasons why graduates preferred start-ups to an established firm. The only disadvantage it seems was the risk factor of the start-up falling flat and being back to square one.

And that is exactly what happened. The majority of start-ups fell flat. Many increased their margin of losses and downsized as a result. For the financial year that ended in March 2015, according to a survey, losses of top 22 online start-ups in the country were recorded to have increased by a whopping 293 percent. Some e-firms across India delaying the joining dates of their new business school recruits by up to six months.

With so many new funded capital e-ventures failing, as of now, business schools are losing their interest in getting their students placed with such firms. Well-established firms offering better career stability are being preferred over other e-commerce firms by students and placement coordinators alike.

Talking about the recent placement season at University Business School (UBS), Panjab University, Institute’s chairperson Suresh K Chadha told Chandigarh Newsline, “Almost all the students of the 2016 batch from UBS have now been recruited, and all of them have been placed with well-established firms only. We do not call in any start-ups or e-commerce firms for hiring as we want to get our students stable jobs. E-commerce in India is yet to catch up with e-commerce firms like Alibaba that have huge annual turnovers and record profits annually.”

Students of University Business School, Panjab University after the successful placement session last year. Most of them secured jobs in established firms like KPMG, General Motors, Wipro, Religare, ICICI among other. (Image : University Site)
Students of University Business School, Panjab University after the successful placement session last year. Most of them secured jobs in established firms like KPMG, General Motors, Wipro, Religare, ICICI among other. (Image : University Site)

At Indian School of Business (ISB), which has one of its campuses in Mohali, as of 2016, the majority of students from ISB have been placed with business consulting firms only. “We do not have a strict policy against calling in recruiters from e-commerce firms, but we do conduct a background check to ensure that students get a return on investment once they get jobs. Students invest a lot at business schools, which is why we look to provide them financial and career stability,” an official from ISB, Mohali, told Chandigarh Newsline.

Even for other business school graduates in the region, start-ups and e-commerce firms are no more the top preference. Students prefer secure jobs even if the perks offered are lesser.

Rishabh Malhotra, an alumnus of the University Business School, PU, has this to say: “The reason why many students are driven towards start-up companies is because they offer outlandish perks. But these perks are accompanied with more working hours and an unstable work environment. Also, more often than not, start-ups rely only on investment as they do not have a self-sustaining model. This adds to the uncertainty factor. A lot of start-ups these days are falling flat.”

Taking the shine off start-ups is the information that many e-firms in Gurgaon, Delhi and Bangalore have been hit by fluctuations in the economy and internet industry and have downsized due to shortage of funds leading to many business graduates being rendered jobless.Devendra Soin, an MBA who graduated in 2014, was one of the many who lost their job when their start up companies started downsizing.

Devendra Soin, an MBA who graduated in 2014, was one of the many who lost their job when their start up companies started downsizing.

“Funding is the major problem at start-ups, but once you get used to the work environment at e-commerce firms and other start-ups, it is difficult to choose otherwise. So it’s actually a gamble – it might just work out for you,” he said.

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