NEW DELHI--The placement process is over in the top three Indian Institutes of Management and all the students have received job offers. In some other top-ranking business schools, 90% to 95% of students had been placed in jobs by mid-March.
So for the top business schools, the placement scenario this year has shown some improvement in the sense that the duration of the placement process has reduced significantly compared with last year.
But the increase in salaries has been only marginal. And the situation is as bad as last year in the majority of our B-schools. Even in the top private B-schools that run parallel management programs to their main programs the scene is no better. The placements so far in most such programs have been between 40% and 60%.
For example, Dr. C.S. Venkata Ratnam, director of the International Management Institute in Delhi , says that although 95% of students that pursue the flagship post graduate diploma in management program have been placed, only about 60% of students in other parallel programs for executives have received job offers.
Lower rung B-schools also are struggling to place their students. In many of them, not even half the batch has been hired. Nonetheless, there is optimism in some quarters that in April the situation will improve.
"Many companies are still finalizing their recruitment needs and will hopefully start their recruitment process in April," says Dr. Suresh Ghai, director of K. J. Somaiya Institute of Management Studies & Research in Mumbai, where over 60% students have been placed.
Accompanying every placement season is the practice of exaggerating salary figures and the appearance of misleading media reports. I have been writing about this practice for the past few years.
Though the top IIMs are not officially disclosing salary figures, there have been "leaks" to the media about salaries of 10 million rupees-plus that some of their students have received. Such a salary is, in fact, often paid in dollars or pounds, and for foreign postings. So, it's not as if the alumni are earning abroad and spending in India .
Also, one has to take into account purchasing power parity to convert the salary into effective Indian rupees. In other words, a dollar's purchasing power in the U.S. is not equivalent to roughly 45 rupees in India ; it is the equivalent of less than 10 rupees. So $100,000 doesn't automatically translate to 4.5 million rupees but really somewhere close to 1 million rupees.
Then, one should not forget that these are cost-to-company or so-called CTC offers, which many times include intangibles such as the cost of training, relocation expenses as well as variable pay. The performance incentive, which can be substantial in these pay packages, is a tricky component. One has to achieve targets to qualify for full pay. If we take all these into account, the 10 million rupee salary is, in effect, a lot less.
In the annual survey of business schools that we do, we ask these institutes for a copy of campus placement offers. A careful look at the offer letters gives the true picture. The package is inflated by notional benefits and the bonus component is usually very high. City relocation charges, which are one-time payments, can themselves go up to over 100,000 rupees. Some companies even include subsidized canteen food in the pay package.
The salary figures look even less impressive if we take into account the education loans that most students take out. The fee in many of our top B-Schools varies between 500,000 rupees to one million rupees for the full program. For a loan of 600,000 rupees, the monthly repayment installment is about 18,000 rupees, which students have to start paying six months after getting a job or after one year if they don't get a job.
If we leave out laterals (students with at least two years' work experience), the average monthly take home for a fresher (a student with no work experience) from a top Indian B-school is about 50,000-60,000 rupees.
For second rung B-schools, it's between 20,000-30,000 rupees. For those lower in the schools hierarchy—and they constitute over 95% of B-schools in India-- the average monthly take home salary works out to anywhere in the range of 10,000-20,000 rupees; that is for those who are lucky enough to get a job.
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