By Jeffrey Gangemi

Rahul Colaco is a 31-year-old from India who completed his undergraduate studies at Mumbai University. He had excellent credentials for MBA programs. He had spent two years with KPMG Audit services and six years with Unilever's (UN ) Indian unit in finance and supply chain functions. Yet he chose Switzerland's IMD over several top American MBA programs -- and in so doing became part of a trend that has been gaining momentum for the last four years: When it comes to attracting international students, European B-schools are gaining ground on their older, more established U.S. rivals.

Enrollment numbers tell the tale. Oxford, IMD, Spain's ESADE, and France's INSEAD all have had a marked increase in enrollments from Chinese, American, and Indian students. Since 2001, enrollment at Barcelona-based ESADE has increased by 700% for Chinese students, 400% for Indians, and 150% for Americans. The increase over the same period at INSEAD and IMD was, respectively, 50% and 66% for Chinese students, 155% and 133% for Indians, and 91% for Americans at both schools.

Oxford says it has seen a similar change. And according to Open Doors 2004, the annual report published by the Institute of International Education, the number of international students enrolled in U.S. business programs was off 4.9% in the 2003-04 academic year.

QUICKER DEGREE.  Students and educators agree that in today's environment the European MBA programs offer advantages that U.S. programs can't match. Colaco, for one, chose IMD for its intense one-year program, "no-nonsense approach," and the high level of work experience of his classmates as well as the diversity (42 nationalities) and intimacy (90 students).

He says the European model is extremely appealing, "especially for someone in the midst of his career, possibly with a family, who wants -- or needs -- to get back to work quickly." That's a big switch from only a few years ago, when top students worldwide regarded most European programs as inferior to their U.S. counterparts.

Europe also has American bureaucracy to thank for much of its recent gains in the battle for B-school students. In the aftermath of the Sept. 11 terrorist attacks, new immigration policies caused delays in visa processing and inconvenienced and sometimes prevented foreign students from enrolling in American schools. Europe's MBA programs suddenly became much more attractive alternatives, especially with the lack of hiring that accompanied the subsequent economic downturn in the U.S.

As U.S. borders tightened, Europe opened wider, partly because of the stimulus students are giving local economies. In the U.S., for instance, the total international student population has contributed almost $13 billion a year to the economy. Recognizing the potential benefits, Germany recently expanded a program originally aimed at increasing the number of foreign info-tech professionals it lets in to include other highly skilled laborers. And as part of its Highly Skilled Migrant Program, Britain announced a new provision that allows graduates of the 50 top business schools to work there for up to 12 months.

AGGRESSIVE MARKETING.  European programs have also vastly improved their marketing in other countries, India and China among them, by "getting more aggressive in promoting themselves," says George Wang, president of the Chinese Professional Network. Last year several European MBA programs conducted recruiting tours in China with the network's help, generating considerable interest from applicants and the media.

Similar marketing efforts by such institutions as London Business School and INSEAD are afoot in India. Ajit Rangnekar, the deputy dean of the Indian School of Business, says these schools "have made themselves much more visible." He cites the convenience of their one-year programs as another reason the European schools are receiving more applications. When broken down, a two-year MBA doesn't encompass two full years of classes and isn't worth the time and money, Rangnekar says. "Those programs were designed when the pace of work life was much slower," he says. Now, an extra year out of the workforce carries more serious financial and professional consequences.

INTERNATIONAL PLUSSES.  One convert, Indian-born Ritesh Bhavnani, is chronicling his experiences at INSEAD in BusinessWeek Online's B-School Journals. "It's safe to say I spent 65,000 euro in total [for tuition and living expenses], which is approximately $85,000," Bhavnani notes. By contrast, a student at Harvard Business School can expect to spend around $130,000 for two years of living and studying -- on top of another year's salary lost.

Students also gravitate to the more international curriculum and the mix of languages that comes with a European degree, which they say is a better fit for today's global marketplace. The Oxford student body is about 30% American, 30% European, 30% Asian and Australian, and 10% African (students predominantly from South Africa and other southern regions of the continent).

Even an American school like Wharton, which is considered strongly international, has only 40% of its population coming from overseas. "Speaking three to five languages is normal at INSEAD," says Juan Lopez-Vacarcel, a Spanish national and INSEAD graduate currently working in the U.S. "It puts us at a tremendous advantage when being considered for international management positions."

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