Indian firms prefer CAs over MBAs as decision-makers

With a post-slowdown environment, Indian firms are paving the way for recruitment of more Chartered accountants (CAs), perceived to have core competence in financial matters. While MBAs are being hired for purely sales, marketing or international trade functions, CAs are increasingly being looked upon as decision-makers, reports Bhargav Trivedi from the Economic Times.

Apart from the stability factor, competence in financial matters, changing taxation regime and risk-aversion are playing in favour of CAs. "These days, we are recruiting more CAs and fewer MBAs. For higher positions like senior managers, we prefer a CA," says Abhishek Tiwari, Senior Manager (HR) at KPMG. The global consulting firm is looking at recruiting 100-150 CAs during the current year in India. Tiwari, however, adds, "We cannot say MBAs are losing their charm, but increasingly, they aren't preferred for a financial job."

Further, with Corporate India getting cautious with salaries, CAs are gaining a natural edge. "If a company is unable to afford an MBA from a top B-School, it would rather hire a top CA than look for a management graduate from lower-rung B-schools," says a global headhunter. A chartered accountant's average salary is at Rs. 6 lakh a month, while for MBAs, the figure is the minimum, says Nagesh Pinge, Chief Internal Auditor at Tata Motors, who sees a growing preference for CAs when companies need better financial control. Loyalty also tilts the balance in their favour. MBAs, due to peer pressure, appear to constantly pursue higher salaries. CAs, on the other hand, are seen as less aspirational and stick to the job longer.

Thus, CAs are currently being accepted as business leaders who could take up roles beyond auditing and financial management. "They are superior (to MBAs). CAs are already groomed for three years during articleship (training with auditors) and can start working from day one," a finance official at a top Indian company who requested for anonymity told the Economic Times.

Compared to a two-year MBA curriculum, CAs go through a rigorous three-year curriculum. Since they understand balance-sheets the best, CAs are being hired for work other than the traditional audit, he points out. Vardhan Dharker, CFO of KEC International, a Rs. 3,000-crore capital goods company, said, "I think CAs are as good as anybody else in taking decisions. There has been a change in the thinking over the past five years."

Brokerages, who bore the brunt of the 2008 stock-market collapse, too have stepped up CA hiring. As important intermediaries in financial transactions, CAs are seen as being more cost-effective. Angel Broking, a leading stock-broking house, has increased CA hiring from 5 percent to 15 percent. "Good MBAs are expensive compared to CAs. For tier-II cities, the average MBA salary ranges between Rs. 4 lakh and Rs. 6 lakh, while CAs are available in the Rs. 2.5-3 lakh range. Both do similar kind of work," says Dhruv Desai, Senior VP (HR) at Angel Broking.

The company recruits CAs for back-office work which is more financial in nature, while MBAs are hired for front-office jobs where they have to interact with customers and use their communication skills. "Though our recruitment is predominately MBAs as we are customer-centric, the ratio is tilting in favour of CAs." he says. MBAs constitute 75 percent of the company's total recruitments, but the share of CAs has doubled to 10 percent over the past two years, he says. The company employs more then 7,000 people. Changing accounting methods and introduction of new tax regime in the globalisation era have pushed up the demand for accountancy professionals.

"Due to complexities of accountings and prospective taxation regime like GST and IFRS (International Financial Reporting Standards), you need CAs as MBAs don't study these subjects," says Sanjiv Shah, who runs an accounting firm in Vadodara. He says CAs are now assuming advisory roles as well. Shah, who operates in the mergers and acquisition (M&A) space, adds, "If CAs have to take a decision about an M&A deal, their skills are useful during the due diligence process."

Please give your views regarding the above article... Do you agree or disagree with above mindset of Indian Firms.