Battle 3 – IIM Indore v/s IIM Kozhikode – Flagship MBA/PGP programmes at Top Business Schools in India are overpriced (AGAINST)


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Kozhikode - How does an NPV analysis benefit us here. That the NPV is positive over a lifetime is no justification of a high fee. Look into any education system in the world and into any discipline the lifetime NPV is bound to be positive. Infact even if the fees were 1 crore the NPV would still be positive. Does it mean the fees could be hiked to 1 crore? I firmly believe that cost should be the firm driver behind fees. If the IIMs believe that they need to charge higher because they think it will help them pay their faculty more and retai top professors then bingo - go for it. But we really need to see if this is happening. I don't think it is happening. I understand that higher fees has given the IIMs more autonomy as govt subsidy has come down but people ( and by people I don't mean the participants here) should really file an RTI and find out the expenditure and then how much revenue is being obtained out of the fees. I still feel the IIMs could lower the fees by 20% - an personal opinion though given that i have read one RTi filed which came an IIM some headroom for reduction. Thanks, Kunal

5 Aug, 2012 |

Rohit Kumar

By making an argument only looking at ROI, the team from IIM Kozhikode has taken a very myopic view. Comparing ROI vis-a-vis Schools like Harvard etc. is not a great comparison because there is a lot more that BSchools like Harvard and Stanford offer in terms of quality of faculty, network, long term brand value etc. I am sorry IIM Kozhikode you are on your way out. I'll be shocked if you qualify with this argument. Also, we havent seen your counterpunch yet!

5 Aug, 2012 |


Against-One of the major flaw of the analysis is they are determining individual returns, not totally wrong but is not it against the over all economic effect. We need to see what value addition these courses do and how they contribute to the economy as a whole, an angle totally overlooked. We do compare with foreign B-schools but do not see the way the education is financed, many a times they are government sponsored and many a times company sponsored, the reason being they look for value addition to the company in particular and the economy in general. But in India its mostly guided by individual ambition, so the comparison does not really make sense. On the other hand, if we consider the executive MBAs they are more costly, owing to the fact that they make more sense in the value addition to the economy. Probably by charging more the intention is to give better quality facilities to aid the value addition process, which is the service a B-school provides.

5 Aug, 2012 |


Against : I am making a little radical suggestions but these points are valid I guess....I question the entire concept of Indian B Schools...They are more like placement agencies...remove placements from the Program and ask the students to fight it in the open job market..!! And see how much students would be wiling to pay for the flagship program. And if the courses are market priced and if students can choose and pay lets say from 100 courses offered in IIM's,how much would they be willing to pay? The point I am trying to make is students are forced to pay and its not a democratic process where students determine the value of the course he/she is taking. Comparing median salaries I don't think is appropriate for the guy with lowest salary still pays the same amount of fees. Making a quantitative return calculation I think is as people said myopic to determine the fees.Also for such a person if ROI is considered, its negative. He forgoes two years of salary, burdened with 7 years of loan and after EMI will definitely be getting lesser than if he had continued with his earlier job. So MBA from India is not for short term gain at all.For a few, the returns are huge, but not for all for at-least a decade.

5 Aug, 2012 |


As a former IIM Kozhikode Placements Committee member, I have to say the assumptions taken here are simplistic to the extreme... With such an exponential increase in batch sizes and no. of IIMs themselves, an average salary of 12 Lakhs(not even getting into the in hand components here) for the thousand or so IIM(and XL, FMS, ISB) grads passing out each year in the current job market is big assumption... taking into account the rising course fee....which a few years back was not even half of current levels(the salaries haven't doubled since those days)...a student taking an education loan even getting the 12L salary is not at a better lifestyle level compared to his/her pre mba days...someone with an education loan might be paying around 30k+ just for the loan which will last for years... In simplistic terms...just compare the no. of IIMs, the no. of students in each IIM(and XLRI, FMS etc.) the course fee and the salary levels year on year from 2007 onwards and you can notice there is no rise in salary levels to compensate for the other factors... My assumptions might be wrong since its been a few years since I passed out and the placement scenario might be back to as good as in PGP10 days..

5 Aug, 2012 |


An NPV analysis does not work right because if u look at he cost of living in a city like Mumbai where it is impossible to own a house except somewhere far in the suburbs. You need to look at the NPV in times of high inflation today..!!

6 Aug, 2012 |


A lot of B schools offer only one year MBA programs. Almost all the European MBA programs are one year programs. These programs are designed for people with work-experience, and hence, are compact programs. Often, they do not have the mandatory industry internship. Since these programs have traditionally been one year programs, the curriculum is designed accordingly. As a result, students gain complete benefit out of the program including placement opportunities. Some of the top European B schools which offer only one-year MBA programs areOxford, Cambidge, IE, IESE, INSEAD, etc.

7 Aug, 2012 |


To be precise, the arguments (& counter-arguments) presented by both the sides is at best juvenile with regards to the pedigree of the institutions. These are some glaring flaws: 1. Surprisingly, nobody pointed out the obvious flaw in the NPV analysis. One needs to consider only "incremental gains" due to an MBA degree & not the entire 12L i.e.. a graduate without a B-school degree isn't going to earn Rs. 0/year Many Graduates reach similar packages (with IIMs) with 2 yrs work experience. (Again these are not any graduates but those worthy of being in IIMs) 2. B-school degree costs tuition fee + opportunity costs of 2 years labor + psychological costs for studying - benefits of Fun.... 3. The returns are: Salary + positive externalities to economy (subsidized by Govt.) + returns due to enhanced macro-economic outlook (which leads to promotion to senior mgmt.) + personal growth (personality/ self-esteem/ better marriage prospects? if you will) So yes, stamping an NPV tag on an MBA degree is not such a meek task. 4. The comparison with foreign B-schools & median salary figures is disappointing. Its like comparing 2nd rate B-schools with IIMs. 5. we also have to keep in mind that the costs for MBA’s abroad are generally 3-10 times higher than those in India ??? Even by their naive "Ratio" arguments, none of the ratios are even twice. What about PPP? If we use WHO-2010 figures 1$ = Rs.20 @PPP. That would put their MBA costs in perspective. (Infact, the salaries of developing countries are fast-approaching their developed counterparts in accordance to the "theory of convergence" of connected economies) 6.. All said, the counter-arguments by IIM-Indore are juvenile. The contempt & haughtiness, which is easily palpable in their statements, are not those suiting an MBA grad of any lineage. 7. Instead of countering the mathematical arguments by delineating the flaws in the NPV analysis, IIM-Indore chose to resort to tactics of intimidation by calling the opponents arguments "laughable, ridiculous & harking upon". (There's a difference between a GD and a written debate) 8. The only valid point in IIM-Indore's argument was regarding the foreign B-school comparison. The rest of the counter-argument is based on disparaging the opponent's argument without elaborating on their own thoughts. Also, MBA from abroad becomes more affordable due to the 20-year (under 5% interest) payback period. 9. NO. The executive-PGP program from any B-school (even IIM-A) doesn't carry as much weight as the corresponding PGP program + 4 years work exp. Care to speak to any e-PGP programmer & you'd know. 10. By this judgment, it is obvious that if the cost of the flagship programme were made lesser, they would derive even more value from it ??? How can price-reduction in isolation enhance value? Value remains constant. Net benefit increases. 11. The counter-argument doesn't present a "broad-picture" (as claimed) at all. The envy of Facebook packages at NIT/IITs & regret of PGP program is evident in the counter-argument. Now you should ask me, "what's my stand?" It's simple: 1. Taking the macro-economic view in mind, these MBA degrees are highly over-priced considering the incremental value the nation would derive by enhancing indigenous skill-sets. Greater managerial talent (along with general Human resource talent) assists private & public policies, national development, better governance, inflow of FDI & FII & other positive externalities that benefit the country as a whole. Hence, the govt. should cap these fees as they are fairly over-charged (Premium market charges even for hostel & IT facilities). 2. From an individual perspective, the degree is neither over-priced nor under-priced. It is the fallacy of the students to exhibit a herd-mentality & follow their friends into an MBA program without any concrete objective or fore-thought. Even an NPV analysis has no relevance for complex heuristic decisions. So, if the market is behaving irrationally & you don't have reasons enough to be in a B-school Campus, you most likely shouldn't be. Still if you find yourself in such an unholy mess, stop crying over spilled milk & make the most outta an unenviable situation! ^ And That's how a sensible argument is made.

7 Aug, 2012 |