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Lack Of Management Talent Means In Asia Pacific, MBAs Are In Vogue

Booming economies are creating too much management demand in the Asia Pacific region. Companies need talent and MBA demand has skyrocketed.

By  Seb Murray

Sat Mar 29 2014

MBAs feel the pull of the Asia Pacific. The emerging economies are in their boom years and the IMF forecasts that the total GDP of emerging markets could overtake that of the developed nations as soon as this year.

It is where the biggest business school hiring waves can be witnessed. Demand for MBAs has hit fever pitch. Graduates who are expanding overseas will have noticed the outstanding appetite among Asian employers for the MBA degree holder.

Data from QS, the business school research company, shows a 20 per cent increase in MBA demand among top employers in the Asia Pacific region last year. There is a further 38 per cent demand forecast for 2014.

Even traditional bastions of b-school hiring like finance, which has been shunned in Europe since the financial crisis, have shot up in the Asia Pacific region. But despite the rapid growth of its emerging markets, there is a death of management expertise.  

“Despite the fact that a lot of great talent is coming in, it’s just not able to keep pace with all the opportunities that companies have in Asia,” says Stephen Shih, an Asia Pacific MBA recruiter from Bain & Company, the leading management consultancy.

The hottest MBA market has been India, which has overtaken the United States in terms of volume of job offers for newly minted MBAs. Employer demand for MBAs leapt 43 per cent in 2010 and a similar 29 per cent growth was reported in 2013.

However, MBA salaries in India remain well below the levels seen in Europe and the U.S, and some companies recruit only locally-educated graduates.

VK Menon, Senior Director of Careers and Admissions at the Indian School of Business, says that the region’s economic strength has created a spurt of demand for middle and senior-level managers. “Business schools have been good hunting grounds for such talent,” says VK.

“Over the last few years, the conventional job markets like the U.S and Europe have not been hiring in large numbers, due to their stagnant economies. Business school hiring is now shifting to the Asia Pacific and the Middle East regions.”

Nonetheless, there remains a lack of management experience in the Asia Pacific area. “This is something which we certainly hear about from our clients and experience as we work with companies in the region,” says Steve from Bain.

The China Business Report, published by the American Chamber of Commerce in China (AmCham), highlighted that hiring challenges are hindering the region’s top businesses. More than a third of companies surveyed said that HR constraints seriously hindered their business. The combined number of those that said it seriously hindered and those that said it just hindered their business is more than 80 per cent.

The report, which surveyed 400 companies, also revealed that 23 per cent of those found it more difficult to attract, develop and retain managers and executives last year.

But China remains a tasty prospect for MBAs. Demand for MBA degree holders among Chinese employers jumped up 35 per cent last year, according to QS. This demand is fuelled by a booming economy that continues to transition from a low-cost manufacturing base to a services-based economy.

The demand is further buoyed by a crop of the country’s leading business schools, including China Europe International Business School and SAIF, which are producing talented international managers whom want to stay in the region after graduating.

Steve says that Bain doesn’t find it difficult to draw talent, but it’s an issue of supply and demand for others. “It’s a case where there’s very fast growth in the region and despite the fact that a lot of great talent is coming in, it’s just not able to keep pace with all the opportunities that companies have in Asia,” he says.

ManpowerGroup, the leading human resource consulting firm, reported that a significant amount of companies in the Asia Pacific region were plagued by a lack of talent last year. The company surveyed 68,000 employers world-wide and one in three reported difficulty filling positions.

But the problem is widespread in the Asia Pacific region, with more than half the employers surveyed in India (61 per cent) and Hong Kong (57 per cent) saying that talent shortages prevent them from hiring people with needed skills.

Jeremy Blain, Regional Managing Director of Cegos Asia Pacific, one of the world's largest training organisations, says that Asia faces a skills shortage “like never before”.

“Such a shortage covers everything from lack of technical.... to a deficit in soft skills and management skills – the latter being particularly applicable to the Generation X grouping of employees set to take up senior management roles over the next few years,” writes Jeremy.

In China, the AmCham report says that companies are responding by providing more compensation and benefits for new hires, and more opportunities for advancement.

“The leading companies are investing in their talent. That’s a combination of recruiting the right people, giving them the right development opportunities and retaining them,” says Steve from Bain. “This is a top priority for us.”

Business schools in the region see the potential too. In India, many schools have tightened up their requirements, demanding that MBAs have work experience, as opposed to the “fresher” model where students enter programs fresh out of undergraduate studies.

“These business schools are alive to the opportunities that are now opening up. They are making significant changes in their strategies,” says VK from ISB, one of India’s highest MBA ranking schools.

“Also, they are looking for students coming in from diverse backgrounds. This is a win-win situation for both business schools and the industry; companies get talent who are able to hit the ground running.”

Steve says that managers in fast-growth markets need adaptability and creativity – both critical skills. “Adaptability includes the ability to face new situations with courage and skill,” he says. “The creativity includes the ability to take a diverse range of experiences and help use that to develop new ideas that cut across different countries, and different business functions and industries.”

However, it is not just talented internationals that are snapping up these positions. VK says that Indian MBA graduates are well placed, as there is a strong demand for “premium” talent in the country.

But companies are not afraid to look overseas to address the lack of management talent.  India has about 4000 business schools, of which around just 100 would be "very good", says VK.

“As more and more companies are operating in the global arena, they do not mind sourcing talent from across borders and continents."