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A crucial test to gain admission in business schools in the US has seen a fall in aspirants for the first time in five years. Applications for the graduate management admission test (GMAT), administered by the Graduate Management Admission Council (GMAC), have dipped 9 per cent from around 6,260 in 2008 to 5,700 in 2009.
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In the past four years, the number of applicants has grown 30 per cent. A top GMAC functionary said this was because of the worldwide economic slowdown. “When an economy slows down, initially people go back to school. But as recession stabilises, people are less likely to give up their jobs. Rather than taking up full-time studies, they enroll for weekend and part-time programmes,” said Dave Wilson, president and CEO, GMAC.
Wilson said that another reason for the decline in the number of tests taken so far was the depreciating rupee. When the currency depreciates against the US dollar, it makes a dollar-denominated purchase more expensive in local currency. Thus, tuition and fees for MBA programmes have gone up as the rupee has depreciated vis-à-vis the dollar.
“When the rupee declines against the dollar, it becomes much more expensive to attend an MBA programme overseas. Many candidates will either decide against attending such programs or will defer their decision to attend until there is either a recovery in the rupee or they accumulate more savings,” said he. Of late, there has been a reversal of this trend. The rupee has appreciated 1.70 per cent between January (Rs 48.76) and July 2009 (Rs 47.93).
Other markets that have suffered due to the slowdown include South Korea where the numbers have dived 20 per cent to 1,875. But China has shown a growth of 34 per cent with the exam being taken 6,830 times so far. In the United States, the numbers are down only 0.2 per cent at 76,314.
The council said softening in some markets could affect its revenues too. GMAC’s revenue for 2008 stood at Rs 8.8 crore, which it says could decline this year. Pure GMAT examination fetches 85 per cent of revenues to GMAC. And the rest comes from GMAT products.
Prominent Indian B-schools, including the Indian Institute of Management, Ahmedabad, and Indian School of Business (ISB), evaluate GMAT scores for their one-year management programmes. ISB was the topmost Indian B-school where Indian students sent scores to in 2008. All told, around 852 management education programmes in India use GMAT scores.
GMAC, however, is looking at strengthening its foothold in the Indian market. “We are looking to increase the number of B-schools, which accept GMAT in India. We are working very aggressively on the Indian market right now and are also looking for a country manager in India,” Wilson added.