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Job placements for graduates of one of the world’s most prestigious business schools have fallen to the lowest levels in more than five years, in a sign of the slowdown in demand for recruitment for even highly qualified candidates.
Harvard Business School reported that of the 73 per cent of its most recent graduating MBA class this year seeking employment, 86 per cent had received an offer. That compares with 95 per cent in 2022 and a recent peak of 96 per cent in 2021.
In contrast to previous years, the school’s website did not show the job offer rates for 2023 until a few days ago, when it posted the information after a query from the Financial Times.
The data comes amid increasing signs of a slowdown in hiring in a number of sectors that have traditionally recruited large numbers of MBAs, including consultancies, audit firms and tech companies. Many this year have made deferred offers, with employment scheduled to start in several months at a time of economic uncertainty.
Consulting companies, in particular, have been wrestling with how to match staffing with a weaker market for their services. Some firms such as EY delayed start dates for graduates who were given offers a year ago, further reducing demand for additional hires now. EY and its Big Four rivals Deloitte and KPMG have laid off staff as clients have scrapped some consulting projects and the deal market remains subdued. Starting salaries for graduates joining consulting firms such as McKinsey and BCG have been kept to last year’s levels, eroding their value against inflation.
At Stanford University, of the 62 per cent of its MBAs seeking employment this year, 71 per cent had offers on graduation and 89 per cent within three months.
Demand among prospective students for the MBA degree in the US and Europe has been stagnating, although that has been partly offset by increased interest from students from emerging economies such as India and China as well as a switch towards more specialist business degrees such as in analytics.
Kristen Fitzpatrick, Harvard’s managing director of MBA career and professional development, said: “This year’s slow hiring market created unique dynamics as students with deferred start dates sought gap employment or alternative full-time roles, and more students than usual pursued post-grad internships.”
The annual Application Trends Survey from the Graduate Management Admission Council, which runs the GMAT test for business school entry, showed a 5 per cent drop in interest for MBAs and for all business school degrees around the world in 2023.
Barbara Coward, founder of MBA 360 Admissions, which advises prospective MBAs, said: “Consulting and tech seem to be somewhat soft but healthcare is a growth area. And any jobs that require data analytics will be in demand.”
She said the dip had been driven by market uncertainty, with “a ‘wait and see’ attitude for additional hires, such as newly-minted MBAs . . . Companies are facing the same challenges as households with the lingering aftermath of soaring inflation.”
But she stressed that the dip in graduate recruitment was not relenting. “Prospective students are thinking about what’s going on right now,” she said. “If you are bored at your job or have a bad boss, you’re more focused on fixing the immediate problem. Taking action by applying for an MBA “is better than being trapped in a bad situation,” she added. “You’ll worry about placement when the time comes and by that time, the economy can change.”
Pedro González, president of TalentMBA and a former careers adviser at several business schools, predicted a stagnation in MBA graduate salaries next year due to economic uncertainty. “The Silicon Valley Bank collapse in early 2023 was a harbinger of equity contraction entering the VC [venture capital] market and the pressure on start-ups,” he added.
Andrea Sparrey from Sparrey Consulting, which advises MBA students, said: “Prospective students are asking more direct questions than ever before about expected returns from the degree.”