India's B-School grads now rake in the big rupees
It's spring, and at the Indian Institute of Management (IIM) - a premier management school in this industrial town - the campus is abuzz with company recruiters offering fat pay packages to new grads. .
Bagging a $185,000 per year offer, Manan Ahuja, an affable 26-year-old lad, coyly notes that his salary package offered by Barclays Capital, a British investment bank, is far more than his father, a Delhi government bureaucrat, earned in his entire lifetime.
"It feels great to get an international offer," Mr. Ahuja says. "Beyond the salary, this promises an interesting job profile and great growth prospects." Ahuja's new job will take him first to London and later to the New York offices of Barclays.
Although securing jobs has never been difficult for students at India's top business schools, the rise in the number of jobs and the high salaries this year are testimony to the premium multinational corporations now place on Indian talent, which, experts say, ranks among the best in the world.
The eye-catching offers also reflect India's booming economy - clocking an 8 percent growth rate for the past three years - as well as a surging global economy that leaves many firms hunting for strong managers.
Management recruiting firms confirm there's an international shortage of good management executives, and salary offers are up about 10 percent over last year.
In five days of recruiting here, 235 students at IIM Ahmedabad were offered 510 jobs - 90 of which are overseas - an average of two jobs per student. The highest value package offered to an IIM student this year - a young man from the Bangalore branch of IIM - was $193,000. That's a sharp jump from last year's top offer of $111,000. Even the highest Indian salary offer of $75,000 was twice the top domestic offer last year.
The tendency toward surging salaries goes beyond the six branches of IIMs in India. A student soon to graduate from the Indian School of Business (ISB), a research-oriented international business school in Hyderabad, was offered a salary package of $223,800 recently, crossing the 10 million rupees (approximately $222,000) mark for the first time. Three other students from the same institute received offers of more than $200,000.
Indian MBA salaries are now in the same range as those offered to grads of the top US business schools. In 2005, the average compensation of Harvard Business MBA grads was nearly $175,000, up 11 percent from the prior year. Stanford and Dartmouth MBA grads averaged $150,000 salary packages last year.
"Multinational companies," enthuses Bakul Dholakia, director of IIM Ahmedabad, "are now realizing that they've got to look at India - beyond Wharton and Harvard - for the world's brightest business graduates."
Indeed, many US firms have already recognized the value of Indian business school grads. The IIM alumni association for grads living in the US, founded last year, has 1,500 members.
Like their better-known American counterparts, Indian business schools are fostering prestige by setting a high admissions bar. Last year, for instance, out of 158,000 students who took the Common Aptitude Test (CAT), the entrance test for MBA aspirants in India, only 1,300 got into India's six IIM institutes.
According to the Economist magazine's Economic Intelligence Unit, the management school here at Ahmedabad is the toughest business school in the world to get into. The fact that more and more students with prior work experience now attend these Indian management institutes - all the students who received the highest salary offers have had a year or more of prior work experience - also makes them more desirable for international firms.
The IIMs were started by the Indian government in 1961 and remain dependent on government funding, a shortcoming according to some professors today. The institutes worked closely with with Harvard Business School to develop a similar system of case-study teaching. Most of the students are Indian, but in recent years, the Indian schools have begun to attract international students because their programs are relatively inexpensive. BusinessWeek.com's survey of MBA costs, estimates that the two-year program here costs just $7,500 for Indians and $22,000 for foreigners, compared to an MBA at Harvard which costs about $138,000.
Skills for multitasking, flexibility across management functions, cross-cultural experience, and an emphasis on translating theory into practice, sets these students apart, say faculty here.
But despite the surge in demand for Indian business school alumni, some Indians say that business schools are selling more image than top-notch pedagogy.
Paranjoy Guha Thakurta, the director of the School of Convergence in New Delhi and a visiting faculty at the Lucknow branch of IIM, says that several talented students who did not clear the stringent entrance exams to these high-profile institutes, would nevertheless make very capable managers.
"These [IIM] recruits," says Mr. Thakurta, "are representative of only a minuscule portion of Indian talent."
But in a nation where the per capita income of an average Indian is only $3,100 (compared to the world average of $8,180) and the unemployment rate here remains at 9.2 percent, most Indians say at these prices, the MBA grads are overpaid.
An SMS poll conducted by New Delhi Television, an Indian television news channel last month, asked their viewers if Indian management grads from schools like the IIMs were worth their big salaries. Seventy percent of those who voted said no.
But Mr. Dholakia says that the stature of management schools here is symbolic of more than just a brand name that draws in top recruiters.
"You cannot sell a product just by its brand image," he says. "No company will visit us repeatedly if we aren't intrinsically good." This year, out of the 110 companies that recruited at IIM, Ahmedabad, says Dholakia, 80 percent were returning firms.
Among those, Barclays Capital was the top recruiter this year, hiring 15 full-time grads - their highest ever from one management school.
"The IIMs offer access to a very smart, highly quantitative, yet business-focused pool of candidates," says Derek Walker, the company's head of graduate recruitment. "We're very pleased with the caliber of [these] students."
Barclays Capital also recruits business grads from other universities in Europe and America, and this year they've recruited three times the number of business grads compared with last year.
"Next year," Dholakia predicts, "this trend should continue. And I won't be too surprised if the pay packets get fatter."