Analysis: The business of producing business graduates

Leading institutes make big money offering BBA degrees to aspirants.

KARACHI:

If you ask a random group of undergraduate business students which academic programme they are enrolled in, chances are that an overwhelming majority will say Business Administration, the certification for which is commonly known as a BBA degree.

For consideration, in its most recent convocation for PhD, master’s and bachelor’s programmes, the Institute of Business Administration (IBA) – which is ranked by the Higher Education Commission at number two among Pakistani business schools – awarded 48% of all graduating students with a BBA degree. Similarly, the share of BBA graduates at IBA in the batches of 2010 and 2009 were 44% and 37%, respectively.

Likewise, about 32% of the 983 candidates who received their bachelor’s, master’s or MPhil degrees in Institute of Business Management’s (IoBM) most recent convocation belonged to the BBA programme.

As it becomes evident that BBA students form the largest chunk in graduating classes of major business schools annually, the question arises as to how much money these institutes make by churning out BBAs in droves every year.

Going by the number of BBAs produced over the last three years by leading business schools based out of Karachi – and relating them to tuition fees listed on their respective websites – it is clear that BBA programmes are a major source of revenue for these not-for-profit educational institutes.

Between IBA, IoBM, Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (Szabist) and the Karachi University Business School (KUBS) – arguably the most prominent among all business schools in Karachi – the highest per-semester fee is charged by IBA. According to the fee structure available on its website, IBA charges BBA students Rs114,200 per semester.

Interestingly, IBA’s fee is four and a half times the per-semester fee charged by KUBS, which was established in 1999-2000 after IBA – till then a part of the University of Karachi, which is also the parent university of KUBS – received the status of an autonomous degree-awarding institution. Fees for the KUBS BBA morning programme is Rs25,155 per semester; while it stands at Rs27,000 for the KUBS BBA (evening) programme.

As for IoBM and Szabist, differences in their tuition fees are not as significant. While IoBM charges BBA students Rs73,000 per semester, the per-semester tuition fee for Szabist is Rs77,400; reflecting a difference of about 5%.

However, if compared to Szabist, IoBM makes more than double revenues through its BBA programme despite charging a relatively lower fee. For instance, 318 students graduated from IoBM in 2011 with BBA degrees. If calculated in nominal terms – ie without taking into account admission fees, examination fees, convocation fees, scholarships or any changes in the tuition fees – IoBM generated total revenues of Rs185.7 million in four years from all BBA students who graduated in 2011.

The corresponding figure for Szabist – disregarding additional fees, scholarships and changes in the fee structure during the course of study – comes to around Rs76.1 million, as the total number of BBAs produced by Szabist in 2011 was 123.

Therefore, despite charging a lower tuition fee compared to Szabist, IoBM managed to generate 144% higher revenues because of a higher number of BBA students, according to the nominal calculation based on the publicly available fee structure of these universities.

As far as IBA is concerned, not only does it charge over 50% higher tuition fees than IoBM or Szabist, a considerable number of BBA students have graduated from the oldest business school of Pakistan in recent years. 294 BBAs from IBA entered the job market in 2011 only.

Going by a nominal calculation based on the number of BBA graduates and the official tuition fee, IBA made about Rs268.6 million in four years from students who completed their BBAs in 2011. The IBA revenue figure is 44.6% and 253% higher than those of IoBM and Szabist, respectively, as per the nominal calculation based on the latest fee structure.

Another notable phenomenon is the rate with which our leading business schools are increasing the number of BBA seats in recent years. IBA increased its BBAs from 169 in 2009 to 294 in 2011, an increase of 74% in two years. The corresponding increase in the number of BBA graduates at IoBM over the same period was 13.5%.

It is surprising that Szabist has kept its student output in the BBA category consistent of late. The number of BBA graduates of Szabist was 123 in 2009, 98 in 2011, and 123 in 2011.

When The Express Tribune asked the Szabist spokesman why it did not increase BBA seats over the last three years like other leading business schools he stated that the figures reflected BBA graduates produced by the Karachi campus only, adding that it was just a coincidence that the number of seats has stayed constant over the last three years.

WITH ADDITIONAL REPORTING BY NOMAN AHMED

Published in The Express Tribune, July 2^nd, 2012.