Early this year, when the Graduate Management Admissions Council conducted a survey of the application trends of the B-schools in United States, it revealed a trend that neither GMAC nor the B-schools there were expecting: for the second year in a row, there was a drop in number of international applications to America's premier B-schools.
From the heady days of 2001-02, when the number of international GMAT applications peaked at almost 109,000, which was about 46 percent of the total applications, the total number of GMAT applicants fell to about 227,000 and that of international applicants came down to 102,000 in 2002-03. But while GMAT applicants declined by just 4 percent from January to May 2004, the number of international applicants fell by almost 16 percent.
More intriguingly, the results showed that India and China contributed most to the fall in numbers: 25 percent of the schools surveyed received fewer applications from China in 2004 than in 2003, and 16 percent received fewer applications from India.
A sharp drop in applications from these two nations, where, a degree from an Ivy League B-school was until recently considered as the ultimate degree among the grads and undergrads, is indeed alarming.
"Lesser numbers of international students means less diversity, which will keep more students away and eventually it forms a vicious circle," says an Indian student from Kelly School of Business, Indiana, which saw the maximum drop of Indian applicants from 2002.
But what could be more alarming is the fact that this fall doesn't quite indicate a reduction of the desire or need to acquire a foreign degree. In fact, while Indian grads and undergrads are increasingly shunning America's B-schools, their penchant for a foreign B-school degree remained as intact as ever, as many head for B-schools in Australia, Spain, France, Switzerland, Singapore, Hong Kong and even Thailand with gusto.
For instance, the percentage of Indian students opting to study in Singapore rose to 30 percent in 2004 from 27 percent in 2003, according to the TopMBA Applicant Survey, that claims to be the world's leading information site for MBS applicants and students. The figures were 30.70 and 27.74 percent respectively for Australia.
According to some experts, the international applicants' sliding interest in U.S. B-schools, although undesirable, is just a correction from the 2001-02 application-boom that was triggered primarily by a global economic slowdown. Indeed, when an economy is down, students look at alternatives to the job market.
Others say the tightening of U.S. visa rules post-9/11 has also contributed to the fall in numbers. Many felt that acquiring a student visa would take much longer now and applied elsewhere.
The cost factor has also worked against the United States B-schools' advantage. While the average cost of doing an MBA from a major university in Europe or United Kingdom, including living expenses, remains at around $65,000, an MBA degree from the United States still costs almost double that.
but the main factor that could have driven international students away from United States, according to experts, is the fact that other countries have become real competitors in attracting the international student population.
Australia, which is perhaps the hottest destination these days, issued an estimated 7,700 student visas in 2003 up from 3,500 in 2002; Canada issued 2,600 student visas in 2003, up from 500 in 2002; and the United Kingdom registered a 20 percent increase of 13,770 in 2003, up from 11,707 in 2002.
The Queen's University School of Business, in Canada, saw a rise of international applications from 24 percent for the class of 2003 to 31 percent for 2004 and 53 percent for 2005.
"Indian students are now spoilt for choice with other fresh destinations like France, Germany, New Zealand, Italy and Scotland, where business schools offer equal or even better facilities than many traditional so-called big names," says Jagdish Mennon, a Bombay-based educational consultant.
"For that matter, forget Australia, Switzerland or United Kingdom, it could perhaps make sense to go to China where a B-School degree could cost about 40 percent lower than an equivalent degree in Europe," said Mennon.
China has 40 MBA programs run by local universities and at least 21 run in collaboration with United States-based B-School partners, Mennon added. Singapore also attracts Indians, not only for its quality of education, but also because Indians finds Singapore culturally similar and Singapore's schools cost much less, as well as the island's proximity to India.
According to accrediting agency AACSB International, U.S. B-schools are facing another kind of challenge; non-traditional management courses. It says schools like INSEAD (France) and IMD (Switzerland) are offering one-year non- traditional programs that are a big draw among international students. The one-year MBA program requires less real and opportunity costs, says a spokesperson of AACSB International.
Which is why then, some of the American business schools have started to craft a series of short-term measures to tackle the fall. Their strategy: to be more aggressive in countries where they have been hit the hardest, and to diversify the applicant pool.
Eli Broad College of Business and Graduate School of Management at Michigan State University, for instance, is reportedly concentrating on new countries in Africa, besides its traditional strongholds in Latin America.
World MBA Tour of TopMBA, which helps as many as 360 schools conduct admission fairs in around 40 countries, is going where it had never gone before -- to countries like South Africa, UAE, Egypt and Malaysia. In India they have started looking beyond Delhi and Mumbai to cities like Bangalore.
Also, schools are now focusing attention on a major obstacle faced by students: funding. Harvard, for instance, has already instituted a new need-based scholarship initiative, and UCLA's Andersen School of Management is also beefing up fellowship fundraising. | 
