Sunday, December 13, 2009


The Common Admission Test (CAT) conducted by the IIMs as an entry criteria for management education in India, has over the last 8 years grown from a test used by the 6 IIMs to one that has about 150 Institutes affiliated to it. Over 240,000 candidates take the CAT. There are other such common tests-at least seven common tests - that are conducted by other Institutes which also have affiliates, some overlapping multiple common tests.

Let me make a proposal that will bring relief to the candidates and also enlarge the market for these test agencies. Imagine a situation where instead of 7 different “common” admission tests, we have one truly common test that is offered 7 different times in the year! If these 7 testing agencies cooperate, we can convert these 7 CATs into one big TIGER – The Integrated Graduate Entrance Rating.

This TIGER test can be under the purview of one professionally managed organization that can be co-owned by these 7 agencies. Actually, it can be owned by all the Institutes that contribute to it in terms of candidates; thus the revenues and surplus can be apportioned in the ratio of candidate applicants to those Institutes.

The Other CATs
The XAT exam conducted by XLRI has about 150,000 candidates taking the test for consideration by about 40 affiliated Institutes. The SNAP exam conducted by the Symbiosis Society has about 120,000 candidates who may apply to the 17 affiliated Symbiosis Institutes. Then, you have the MAT which has about 100 affiliated Institutes through whom about 100,000 candidates apply.

The ATMA exam conducted by the Association of Indian Management Schools has about 20,000 candidates. The JMET conducted by the IIT for the 7 affiliated schools has about 50,000 candidates. The NMET conducted by the Narsee Monjee NMIMS University draws about 60,000 candidates. There are also the Common Entrance Tests – CETs- that are conducted by different state government agencies, and these scores are accepted by various third tier schools.

A typical management school applicant ends up appearing for at least 3 of these 7 national common admission tests which are conducted from November through March, the normal admission season. There are conflicting schedules which prevent the students from appearing for all these 7 tests; more over the costs are high.

These tests are invariably held only in about 30 cities and towns; thus the candidates have to spend time and money travelling from their hometown to appear for these tests. A candidate, on an average, spends about Rs.4,000 as the fee for these exams in addition to the amount spent on coaching classes and travel/stay for the test. Each of these tests allows only one appearance in the year (except MAT which has 4 seasons) and hence if that date is not convenient for the candidate, he loses one full year.

These testing agencies charge anywhere between Rs.800 to about Rs.1800 for the test; thus the CAT gets a revenue of Rs.45 crores; the XAT makes Rs. 12 crores; Symbiosis makes about Rs.12 crores; MAT about Rs.10 crores; ATMA about Rs.2 crores; JMET about Rs.5 crores and the NMET about Rs.6 crores.

The total revenue for these 7 agencies is estimated to be about Rs.90 crores with a total candidate strength of about 300,000 unique test takers and a total of about 7.4 lakh tests being delivered. At these levels, India is the largest market in the world for management education entrance exams.

The GMAT pales in comparison with just 265,000 total tests delivered in 2009. The GMAT however is the one and only common exam that is accepted by about 2,000 Universities in North America and around the world. At a fee of $250, the total revenue is $66 million or 300 crores.

While the Indian market size is almost 3 times that of the GMAT worldwide in terms of tests, in revenue terms India is only one-third of the GMAT. I will argue that it is not just because of the higher fee or the $ effect. It may also have something to do with the fact that our testing agencies are probably less customer centric in their approach.

The 7 different testing agencies have effectively fragmented the market with the possibility of cannibalization ; as a result, test takers face challenges and take these exams in a less than ideal environment.

Here are some of the challenges in the current system:
a. Each of these tests is offered only once in the year (except for MAT). Therefore a candidate who misses that one date is out of the race for one full year. GMAT is offered on demand.
b. Since these tests are offered only in about 30 cities in India, candidates spend a lot more resources to take the test. GMAT, a foreign test catering to far fewer candidates, is offered in 15 cities in India!
c. These tests are not standardized, and not very scientifically designed. Candidates spend on an average about Rs.20,000 in preparing for these tests with coaching Institutes claiming to have mastered these tests. The MBA coaching industry is a Rs.400 crore market. GMAT is a standardized aptitude test.
d. The scores of the Indian tests are not, therefore, valid for use across different batches of students. The IIM-CAT has recently said that their scores are valid for 2 years. So, candidates appear in subsequent years to get recent scores that are accepted by Institutes. GMAT scores are valid for 5 years since it is a standardized test whose reliability and validity has been proved.

The TIGER can Roar:
Once this is done, the TIGER test can be offered at least 7 times in the year thus making it easier for candidates to take or retake the test. Thus, the pool of 3 lakh unique candidates this year will result in about 9 lakh tests being delivered in the year.

The test fee can be easily raised to Rs.2000; this will actually be less than what the candidates pay now for the 3 tests that they take spending about Rs.4000. Thus, the total revenue for the TIGER test agency will be about Rs.180 crores; double the current levels.

This is easily borne by facts. Before the SNAP common test was designed by the Symbiosis Society, each of the then existing 11 institutes had their own entrance test and candidates had to make a choice; these 11 exams were cannibalizing themselves. On my suggestion, the common SNAP exam was devised. The number of applications went higher and the total revenue to the Society increased multifold. What’s more, candidates benefitted immensely in the process!

The TIGER test can also then be offered in more cities and towns in India. About 50 cities account for about 85% of the test candidates. Since candidates will save on the travel costs, they will not mind paying Rs. 2000 for the test which is marginally higher than the current fee.

The TIGER test agency, with revenues of about Rs.180 crores, can then afford to spend on making this test a very strong standardized, scientific, and valid test. Once the test is made standardized, it can effectively compete with the GMAT worldwide. The Chinese form the third largest group, after the Americans and Indians, of GMAT test takers.

Given the revenue levels, the TIGER organization can establish its own permanent testing centers across these 50 cities with its own WAN, thus bringing centralized control of online test delivery on a private dedicated network which will be secure. The cost of setting up this infrastructure will not be more than Rs.200 crores. This infrastructure can then be used by other tests – either educational such as the AIEEE, JEE, GATE, or for recruitment such as the DRDO, Railways, or the Banking tests. This will result in additional revenues for the TIGER setup.

The obvious question is whether these CATs will voluntarily see merit in converting themselves into a TIGER. I would argue that if they do not come together into an industry self-regulated institution, the Government will step in. We saw such attempts earlier during the BJP regime when the then HRD Minister Dr. Joshi came very close to establishing one under the Ministry. While Mr. Sibal may assert that the IIMs are autonomous and may leave the CAT alone, perhaps because under the current problematic situation everyone wants to pass the buck, it is very likely that the same Government may step in later to control the affairs of the educational institutions. So, it is in the interests of these Institutions to strengthen themselves by coming together. It will also establish the superiority of India in the international market place.

The author, Dr. Sankaran Raghunathan, is the Dean of the National Management School. This article appeared in the Hindu BusinessLine on Monday Dec. 14, 2009 at