Business Schools Suffer in 2009

MTEven by the spring of 2009, enrollment was down some 40 to 50 percent.

Russia’s business education market was among the world’s worst hit in 2009, with schools attracting barely half as many new students as a year earlier and others dropping out after their first year.

In the best of years, the country’s management programs had a combined 10,000 students, all of whom were enrolled in two-year programs. The vast majority — about 80 percent, according to estimates by Begin Group — start their studies in the fall, and in 2008 the crisis had not yet hurt enrollment.

But last year, the global economic collapse had taken its toll. In the spring, admissions were at least 40 percent to 50 percent down from a year earlier, according to various estimates. The first to leave were students whose employers were paying for their classes, and they comprise about 35 percent of the overall number, according to Begin Group.

By the fall, even the most pessimistic forecasts had proved justified.

Vlerick Russia business school’s Belgian EMBA program accepted 22 people, down from 38 in 2008, although in monetary terms the fall was less significant, spokeswoman Anastasia Korshunova said. The program’s cost increased to 22,000 euros ($31,100) last year, from 22,000 euros, and the school is not offering discounts, she said.

Fall admissions at IBDA were about 80 percent of the record level for 2008. At the Higher School of Corporate Management admissions were 75 percent of 2008’s level, while at the International Management Institute of St. Petersburg they were 85 percent, the schools said in response to questions from Vedomosti, without giving additional figures.

At Mirbis, admissions fell by about 30 percent, as the school kept prices at 2008 levels of 480,000 rubles ($16,100) and offered various discounts. Additionally, second-year students began facing more problems paying for their classes.

To support such students, the school began using its own funds last fall to offer a lending program, under which the student pays 65 percent and the school covers the rest at 5 percent annual interest, with payment three to five years after receiving the MBA.

In 2009, the school gave out seven such loans, and it has a budget for 10 this year, said Yelena Beshkinskaya, the school’s first prorector for development strategy.

The International University in Moscow’s Higher School of Business and Management barely enrolled 23 people for its classical MBA program. In 2008 there were 25 students, compared with 46 in 2007, deputy dean Yelena Glukhova said.

Falling demand for MBAs also took a toll on Moscow State University’s Graduate School of Business Administration, which enrolled 100 people in 2009, down from 120 a year earlier, spokeswoman Olga Matveyeva said. On the other hand, demand for EMBA diplomas nearly doubled, with admissions rising to 45 people in 2009, up from 25.

Several other EMBA programs also had a good year. St. Petersburg State University’s Graduate School of Management enrolled 40 students, up from 32 in the fall of 2008, and without reducing prices. Skolkovo said it enrolled 40 people, up from 23 in 2008.

The International Institute of Management LINK also saw its program increase, rising 17 percent to 496 students, from 424 a year earlier. The program’s director, Natalya Zhavoronkova, said that in the fall students whose employers were paying for their classes began to return.

The Stockholm School of Economics admitted two groups for its EMBA program General MBA. The English-language course had 27 people, down from 35 in 2008, but the school also enrolled 36 students for its Russian-language program, the first on the market.

The new program attracted new students from the regions and allowed the school to maintain its overall level of students from a year earlier, despite the fact that its second EMBA program — for marketing — was not offered last fall. The school sees the overall market as remaining complicated, spokeswoman Anna Izmailova said.

According to the GMAT 2009 Application Trend Survey, in 2009 about 65 percent of U.S. full-time MBA programs said they had more applications than a year earlier. The number was even higher in Europe and Asia, with about 70 percent saying applications were up.

Since full-time MBA programs in those markets last just one year, they experienced growth in 2009.

The market for Executive MBA programs in developed countries (which accounts for a small portion of the overall business education market in the United States, Europe and Asia) fell on average 25 percent last year, according to Begin Group.

The situation on the Russian market looks reasonable given that the overwhelmingly majority of programs are part-time, said Alla Zhavoronkova, Begin Group’s director for work with foreign clients. She estimated that the market had fallen by 30 percent to 40 percent.

“For 2009, even the market leaders saw enrollment plummet by 25 to 30 percent. The smaller schools had even bigger drops,” said Sergei Myasoyedov, rector of IBDA, adding that he did not expect the situation to improve much in 2010.

Sergei Kalendzhyan, dean of the Higher School of Corporate Management, said he was surprised by how fast the business education market fell.

“Our entire post-socialist economy is still in a pseudo-market environment. It’s no surprise that our entrepreneurs still haven’t recognized the importance of business education for their own and their businesses’ capitalization. They’re still counting on their connections, like in the olden days,” he said.

“An MBA or DBA degree is more of a matter of prestige for them, of luxury. Around the world demand for education is rising, but unfortunately that isn’t happening here. This will be a waiting year, and the main task will be hanging on and preventing any further fall,” Kalendzhyan said.

According to data from Head Hunter, since early fall the number of vacancies for top managers has begun to rise.

See also:

First Russian Business School Enters Top 50 of Financial Times Global Ranking

Innovative Russian Managers Catch IMDТs Eye