3) Economy: Uncertain economic situation. Certain big names are sure to be missing from placement reports this year especially in Banking & Finance. Given that hiring was robust in 2011 and that growth in FY 2012-13 is expected to drop, it will be interesting to see if companies continue to hire in large numbers.
Given below is some data which should help you appreciate the magnitude of the concern in many quarters. Given below are the details of the Class of 2012. Batch Size and cost of programme. Click on table to enlarge. 
ISB is a one year programme so one starts earning faster although the cost is almost twice that of the IIMs. Harvard Business School figures have been put in out of my own academic interest.
The above salary scenarios are just illustrative. They do not include perquisites and non-cash benefits which may be part of CTC but do not affect cash in hand. You will also appreciate how the same take home salary can bring out varied emotions for people based out of different cities. For e.g. Cost of living in Mumbai vs. Cost of living in Hyderabad/Gurgaon . Let me not even get into quality of living!
Companies
I hope companies account for all this when designing compensation plans and even campus recruitment strategy this year. There is no point recruiting from top institutions and getting people who are forever going to be unhappy about the money they get. Companies are increasingly going to find new joinees already stuck in the web of debt and the ever-expanding aspiration for owning and consuming latest products will ensure they take on more debt. Large batch sizes force people to accept jobs they don’t really want. And then, in the first year itself they desperately try to switch to another better paying and more glamorous job. It is an absolute waste of time and money for the company. They would rather go to places where expectations are better managed and education loan debt is not that high.
Take the case of a 26-year old fresh graduate with a monthly take home of Rs.75,000 with an education loan EMI of Rs.20,000, Rent (shared flat), Food & other living expenses of Rs.20,000 per month in Mumbai. Add another Rs.5,000 for miscellaneous expenses. Now if he sends some money home to parents, there is barely any left for him to save. He plans to marry this year and soon his rent will go up by Rs.15,000. Suddenly, it does not look as good as it sounds when one first read the attention grabbing salary figures in leading newspapers of India.
Companies need to take note of this changing environment and hence the expectations of fresh graduates.
(However, having said all of this I must still admit that management graduates from top institutions in India should consider themselves fortunate. There is just too much poverty in this country for anyone of us to complain)
Students and Campuses
If you’re a student in any of the business schools, you need to ask your placement committee to give you the exact compensation structure. You must know your monthly post-tax takeaway after all deductions. By just saying compensation is 16 lakhs ($32,000) does not help. The devil is in the details and make sure you have the details or else you may be in for a rude shock after seeing your first salary slip.
According to my estimate there is a great possibility that about 30% of the Class of 2012 will not save more than Rs.25, 000 after paying their educational loan EMI, House Rent and Food per month. A major revision across sectors and domains will be needed.
Needless to say, past record says that if you’re in IIM ABC you’re better off even if you’re an average student in your school. There is just way too much that companies are willing to offer in these schools because of extra-ordinary alumni linkage. There are companies that recruit over 15 people in each of the 3 schools and are not willing to even look at resumes of people from anywhere else. (Why some companies are willing to fight for someone in the top 200 at IIM A vs. someone in the top 20 at IIM L, I, K, XLRI, FMS etc. is an interesting question but is beyond the scope of this article. May be we’ll write on it later)
Perhaps from all the schools listed above, the biggest test will be for my alma mater IIM Indore. It has aggressively hiked course fees citing better infrastructure, better course content, experiential learning etc. (MP Rural immersion, Himalayan adventure trip for strategy, Malaysia industrial trip are examples but students are expected to pay some part even for these trips) Moreover it has also gone all out to be the largest IIM in terms of batch size – 450 for the Class of 2012 from 240 for the Class of 2011. If they can pull off good quality placements for majority of the batch (i.e. in my opinion over 350 students) they would have done something quite extraordinary given the institution is only 15 years old. Looking at the economic situation at this point, it looks like an uphill task though.
Purely, from a return on investment perspective it is a great time to be in FMS Delhi or JBIMS Mumbai. Even if you don’t get the best job on these campuses you will still be in the position to be able to easily service your EMI and still save enough for the future and make merry in the city you work. I am not sure one even needs an education loan if one is at FMS Delhi. I would much rather be an average student in FMS Delhi/JBIMS than be an average one in IIM L,I,K,XLRI,SPJIMR.
After analyzing a lot of this data, I’m even more convinced that its time placements are handled by professionals and not students. There is just way too much at stake for it to be run by students any further. (You may want to read : 5 reasons why student run placements should give way to CDC)
One may wonder why a post-graduate management degree is needed at all. Why can’t I just work my way up or even do something else? Unfortunately, India is the perfect example where Sir Ken Robinson’s term applies – Academic Inflation. And if I may add one more word before it – ‘Restrictive’ Academic inflation. You can only rise above a certain point in the organization if you are a post-graduate degree holder. And the word ‘restrictive’ kicks in because certain people over the years have ensured that only management degree holders from select institutions get access to certain jobs.
Entrepreneurship
The only sure shot way to beat all this is by choosing to be an entrepreneur. No one can say you can’t do business because you’re not from a particular school. All the above analysis becomes irrelevant. You neither worry about the batch size nor the average salaries or monthly take home.
You can choose to be an entrepreneur even after getting a management degree. However, the top institutions need to step in here. A few have introduced concepts like placement holiday and a few brave ones have even given a fee waiver/refund. Such support will go a long way in ensuring entrepreneurship is encouraged and does not get killed in the web of EMIs.
I have tried to make some sense of the environment at present with the help of some data and my little experience and intuition. Readers must note that though we are using parameters like ROI, EMI etc. above management education should not only be looked at from the lens of placements and money. There are a lot of other things to it which various writers on this website have tried to talk about as well.
I wish all the business schools the best for the Class of 2012 final placements. Let’s hope there’s more peace and less heartburn. Above all, I hope the graduation of Class of 2012 results in many more start-ups and exciting ventures. And if nothing, then social leaders like him.
- Ankit Doshi
(I would like to thank Lakshmanan Ganesh for helping build the EMI calculations. He is from the Class of 2011 at IIM Indore and works with ITC Limited)
(The author is an alumnus of IIM Indore – Class of 2011 and Narsee Monjee College of Commerce and Economics,Mumbai – Class of 2007. He currently works with Bank of America Merrill Lynch and has worked with TATA Capital and WhatsonIndia.com in the past. He still believes that ‘Umang’ NM College’s festival was the best thing to have happened to him where he led a team of 500 students)
If you are preparing for Summer Placements or Final Placements, please have a look at our Career Guide - The InsideIIM Career Guide
You may also like to read :
Summer Placements 2011-13 - IIM Bangalore
Summer Placements 2011-13 – IIM Lucknow
Summer Placements 2011-13 – IIM Kozhikode
Summer Placements 2011-13 – XLRI Jamshedpur
Summer Placements 2011-13 – FMS Delhi
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Comments
Rashmi Thakur
Some reality check there ! Will have to plan well. Finals will definitely not be a walk in the park.
29 Nov 2011, 10.12 PM
Rashmi Thakur
Oh ! And What about shopping and lifestyle costs? Will have to make do with whatever little is left after paying EMIs !
29 Nov 2011, 10.15 PM
tapak
great article Ankit.
29 Nov 2011, 10.26 PM
Ankit Doshi
Shopping and lifestyle costs! Is there are monthly benchmark for that ? :P
29 Nov 2011, 10.27 PM
+Read Replies (1)
Rashmi Thakur
There is none really. But one can definitely aspire to own a pair of Jimmy Choos and a Chanel evening dress ;) But these are mere aspirations of a girl. As far as lifestyle costs go, doesn't the town matter here? These days, drinks happen in the car. And I think that's how it's gonna be after graduation too.
29 Nov 2011, 10.40 PM |
Jagdeep Singh
Nice article! I like the concept of fee waiver or part refund for those who plan to sit out of placements. Otherwise, the huge cost of MBA education will effectively kill entrepreneurship after graduation. Maybe the business model of MBA education in India can be enhanced so that a student who sits out of placement and starts his own firm, gets a fee waiver! But in return, he pays a share of profits from his business to the Institute !!
29 Nov 2011, 11.00 PM
Charan
Dude, thin about the Opportunity cost of working in those two years and later the money that is poured into EMIs while others are busy booking flats or buying cars! Excellent article :) Oh and yeah, for people looking to marry as you mentioned it's a choice between devil and the deep sea!
29 Nov 2011, 11.45 PM
Pallav
Nice post Ankit. Sure to help a lot of people joining the job market this year.
29 Nov 2011, 11.57 PM
Parag
Hey Ankit, Your figures for HBS are one year tuition fees, so total cost of a Harvard program is roughly 168000 usd
30 Nov 2011, 01.29 AM
+Read Replies (1)
Team InsideIIM
Thanks Parag for bringing to our notice....We're changing that as soon as possible
30 Nov 2011, 08.35 AM |
Karan
Nice post Doshi, you brought about some of my favourite reasons for "why entreprenuership". I liked your breakup of expenses as well. However, a very relevant point was that we are quite lucky as compared to everyone else, and hence should not be cribbing about it. However, I disagree with your view that a professional organization should be brought in for placements- I dont think they could do a better job of getting more "quality" offers (which is what we are looking for) Couple of corrections: 1) If the fees for IIMI is 11 lakhs, the EMI of 22500 is for 5.25 years, and not 7 years. 2) Your figure of 30% figure not saving more than 25k seems to be understated. It should be more in the range of 60-65%. Good timely post.
30 Nov 2011, 12.22 PM
Miti
Brilliant post! I like that InsideIIM is moving from mere opinion articles to hard facts and analysis. Keep it coming!
30 Nov 2011, 01.37 PM
Rahul
I believe a professional team cant do as much as a student body when it comes to placements. @Ankit, Is it true that at IIM Indore, placecomm has students from the same batch, that it seeks to place? In that case, a professional agency is probably a better idea.
30 Nov 2011, 01.54 PM
sagar
You should have also brought into light the salary rise a person is going to get after he joins the job. This would certainly lessen the burden so to speak.
30 Nov 2011, 09.11 PM
+Read Replies (1)
Ankit Doshi
No one gets a salary hike after joining the job. Hikes start happening after a year has passed and in most cases after 2 years because most companies have a management trainee programme where you don't directly contribute to the business.
30 Nov 2011, 09.42 PM |
Comment
Nice point of view ! But the article is based on the premise "MBAs are meant to lead glamorous lives and and MBA is your way to awesome bank balances" ! Well, MBAs are not very different from normal people. Except that they have huge expectations. Expectations which they do not deserve (in my humble view). MBAs are grossly overpaid for their actual contribution to the business (again my humble view). So, you have shown max EMI is 27.5k. Take home salaries in these institutes will be 75-80k atleast. So even after EMI you are earning anywhere between 45-50k per month. True, costs are high. True, savings are less. But that is for everyone. People live in Mumbai at a salary of just 25k (all techies will agree). You are earning double than that. Live within your means. Why will the company compensate you for your desire to live an extravagant life ? You will lead quite a comfortable life. Trust me. My story. 16L package. take home 85k (without year end bonus). Repaid almost the entire loan in 1.5 years. Getting married and not afraid of finances. Even if your fees is increased, yo will repay it in 3 years max.
1 Dec 2011, 10.39 AM
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Kuresh
But I can work for 2 more years, perform well and get increments rather than take the burden of EMI and also lose salary for 2 years. What about opportunity cost mate?
1 Dec 2011, 11.05 AM |
Comment
It is better to do an MBA as soon as possible if you are getting a top 5 institute offer. Simple time value of money mate. If you start earning 80k/month when you are 24, it is much better than starting from 25k/month followed by 2 year work ex during which your salary rises to 40k/month and then 2 year MBA after which you get 85-90k/month when you are 26. Whenever you do an MBA it will be two years of no pay. :) You can take a little burden off the EMIs by having a corpus by working before but you will still need a loan coz the fees is too high. And any increment will not match the pay of an MBA (again coz we are paid more than what we deserve :P )
1 Dec 2011, 12.02 PM |
sagar ahuja
I meant that only. It is common sense that a person is not going to get a salary rise directly after joining the job. A person should be able to devote atleast around 1.5 years after his or her MBA and then think about getting married otherwise it will always be a very tough task even for the most bright student. Frankly what i feel is suppose a person gets an avg package of around 11-12 lacs and he gets around 10 lacs on hand. Lets say he has an initial loan of 12 lacs on him and considering an annual interest rate of 11 % for 5 years . He has a total loan of 1860000 on him. So what he can do is pay around 6-7 lacs during the first year and then divide the loan accordingly for the next 4-5 years. Even after that the person will be having a decent enough salary to live with a reasonably good lifestyle. "Please note in this 4-5 years of repaying loan the salary of a person is also going to get a rise in salary even for an avg performing candidate" So it will also lessen the burden.
1 Dec 2011, 12.31 PM
Ankit
I am glad that I am not caught up in all these calculations of EMI etc. Life is good and rocking at FMS :)
1 Dec 2011, 11.48 PM
Nishant Visen
A very well researched article indeed... But over and atop all these stats... the fact of the matter is that the "IIM" brand per se includes the new IIMs as well... and of the 6 new IIMs... 3 go in for final placements this season... i.e.IIM Ranchi, Rohtak, Raipur... Of these Ranchi was the one which came up with pretty decent summer internship figures viz a viz others... Infact it was the first of the new IIMs... So it will be indeed interesting to see whether the IIM brand in itself is strong enough to pull it off... After all we have the mighty A B C to show the way... If so is the case... the non-IIM B-schools will have an uphill task as ever before... More so because "IIM" remains the dream for most, if not all, the B-school aspirants... Interesting times it seems...!!!
2 Dec 2011, 04.08 AM
Shubha
Interesting for sure. A bit sceptical about the whole 'brand' discussion. One thing I have learnt after working for 3 years and an IIM B degree and then again working is that 1. True, CTC figures are inflated. 2. A typical MBA in India somehow does not go out and look for non-traditional opportunities. 3. Life goes on !
2 Dec 2011, 08.56 PM
Guest
Very well analyzed...and true for the Indian scenario...given that the first two year salary remains the same for most of the grads....the pinch lasts longer....and even if you switch a job (given the economic scenario in the last 3.5 years) you don't manage more than a 10-15% jump...(barring very few candidates) so...there is a sense of dissatisfaction...no doubt the no. of ppl appearing for CAT and XAT hv remained flat....Think very seriously...b4 you go for an MBA...and think 10 times b4 joining the B-school you are getting admission into...My view is not solely my opinion...i know arnd 40-50 ppl who hv experienced the same.... From A 2008 batch grad (from one of the top 5 institutes mentioned above)
3 Dec 2011, 11.31 PM
Tarun
I should congatulate Ankit for this nice article. I use to do the same math and bring important point about people even getting 5-6 lakhs job in our batch. Image their situation being not able to manage even EMI and basic living expenses after MBA from IIM.Some got packages lower then what they were getting before MBA.So experience people should take a considerate decision taking economic condition into account before joining MBA. If recession hit back again this time then we will see series of default and banks refusing to give loans which then finally forcing IIMs to reduce irrational fees rise they have done in past 4years. Lets hope crisis does not take a toll on IIM placements.
4 Dec 2011, 09.30 AM
sayan
Nice article. I feel that Institutes should be sensitive to students concerns. With the increasing batch sizes there will be many students who wont get a job of their choice. In that case they would prefer to work in a role which interests them rather than a low paying role in which they don't have interest. IIMC has taken a remarkable stand in this regard <a href="http://www.samachar.com/Get-a-PSU-job-IIMC-will-refund-your-fees-llieTtefbdd.html" rel="nofollow">http://www.samachar.com/Get-a-PSU-job-IIMC-will-r...</a> IIMK had also reduced their fees by 30K to help students in a similar way. Even in US institutes like Stanford refund your fees if you work in a NGO or not for profit organization. I believe all IIM's must have a system like this to motivate students and also provide them a moral support to become an outlier.
4 Dec 2011, 09.30 PM
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Rahul
Honestly, reducung fees by 30k a year will hardly make a big difference. Its just an attention grabbing gimmick. So is the PSU thing. They are saying, if we can't place you in a private company take the money back
4 Dec 2011, 10.53 PM |
sbk1337
FMS/ JBIMS Delhi should be FMS Delhi/JBIMS
8 Dec 2011, 11.53 PM
+Read Replies (1)
Team InsideIIM
Corrcted. Thanks for pointing it out.
9 Dec 2011, 11.55 AM |
sahil
Is IIT-B AND IIT-D worth applying for me ? My Profile 10th and 12th- 81 % Btech from bits pilani- 65% Workex- 2.5 years Current CTC- 4.5 lacs
26 Jan 2012, 09.09 AM
+Read Replies (3)
random commentor
Assumption: ur doing well in ur field(->BITS pilani) i dont think so dude. Try to make it to FMS or JB. Most of the non-IB comps dont consider them to be different from the top IIMs. Having ordinary looking acads(no offence :)) throughout I dont think IBs are an option even if u make to IIM ABC. or You could become an expert at what you are doing in a few years rather than starting afresh as a management trainee after a generalist course which is frankly not that well known for its laterals. You could also think of an international PG degree in a relevant field. to quote a famous personality "dare to think beyond the iims/iits/hyped brands" :P :P :P
26 Jan 2012, 06.47 PM |
Anonymous
Wow man, at best it reflects your derision for these world-class institutes and at worst it reeks of your over-confidence. Sorry for being blunt, wish you the best!
29 Jan 2012, 01.21 AM |
nitin
so profile of sahil is not eligible for IIM ABC even if he score 100 percentiles
19 Jul 2012, 11.47 PM |
@teehehea
@insideiim Could you put a post explaining the calculations for the 1 year PGP for executives programs across IIMs/SP Jain similarly?
3 Feb 2012, 09.41 AM
+Read Replies (1)
Team InsideIIM
We have got this request earlier as well. We are working on it. However, we do not have enough knowledge and information on EPGP programmes. And we don't prefer writing or getting someone to write about things we don't understand well enough. But work is underway.
3 Feb 2012, 10.06 AM |
vaibhav
I converted Symbiosis institute of telecom mangement and currently working in with CTC of 5.5 lacs in telecom domain itself with 4 years of work experience so please tell does it worth joining such a college or go for Executive MBA
22 May 2012, 12.56 PM
rahul
after reading this article i think my doubt of IIM K vs JBIMS is cleared , was confused about which one to prefer since both are almost equals . but given my weak financial condition JBIMS is the clear winner ! thanks for this article !
6 Jun 2012, 02.33 PM
Prash
A very good Post. Thank you for this. FYI, I am a middle level executive in a large firm and was looking at this out of curiosity. I do have to disagree about some jobs only for graduates from top management institutes. As somebody who sits on the other end (i.e. recurits folks, manages promotions etc.) one's degree is only a gateway to get a job. After that, it's always only your performance in the role and your achievement v/s targets. Also, becoming a subject matter expert in one chosen area will help you move up the ladder quickly. Of course, various other things do play a role and by other things I mean how you manage the art of office politics, but that's something you learn at work. So, by all means get yourself a good management degree, but be prepared to work very hard to see the fruits of your degree. The degree itself will not guarantee you success in your job.
3 Sep 2012, 09.59 AM