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IIM graduates are preferring to stay back in India

July 30, 2008

Foreign companies have not upped their salaries much over last year…this is in reference to paychecks offered to Indian Institute of Management (IIM )graduates. However, domestic companies have increased the salaries of new recruits from IIM’s by over 30 percent (IIM Ahmedabad figures only) but the average international offer has gone up by barely over 3 percent. Clearly the slowing down of the world economy hasn’t reduced the strong desire of domestic companies to lure IIM graduates, and as usual this year people hired from the IIM’s (all) lead the pack when it comes to salaries!

And although foreign companies are not offering anything much above over the previous year, if it is anyone they want from India, it still continues to be those passing out from IIM’s and those from IIM-Bangalore seem to have the greatest brand value abroad.

IIM Bangalore – 52 percent bagged overseas offers.
IIM Ahmedabad – 24 percent
IIT Mumbai – 17 percent
IIM Lucknow – 12.5 percent

Fewer Indians are taking up job offers abroad this year
These are just offers. The reality is that Indian companies have won out and fewer students are going abroad. Partly because domestic offers are lucrative (and the dollar certainly goes a long way here!) This year, more than three-quarters of the graduates from IIM A are staying back in India, and of the group which is heading abroad, it is Asia Pacific most are heading to, not the west or the middle East like it was before.

If you can be Vice-President, why should you not accept a lower salary!?
If fewer IIM graduates are going abroad, it’s also because they have become picker than ever about job profiles. They can afford to as they get high salaries anyway! This choosing to take a lower paying job has been a trend for some time now with graduates giving more emphasis to job content and less to salary.

At IIM-K, it is estimated that as many as 20 percent of their graduates preferred lesser pay over role offered, a role which they felt would ensure them better job satisfaction and better career growth. Companies in fact have been creating attractive job profiles to “woo” potential recruits. However this did surprise me:

As a result of better profiles on offer, some of deserving graduates got mid-level to senior level jobs straight out of campus. At IIM-L, a leading telecom company offered a role of Vice President….The going this year was so good-niche domestic offers, preferred profiles an hitherto unheard of compensation-that several students preferred turn down international placements.

An IIM gaduate becoming a Vice President straight away may be an unusual example (I think) but certainly those passing out from IIM’s seem to be getting far better designations and job profiles than those from other institutes. If you can get a non-entry level position (some have a couple of years work experience) then why take up an international offer at entry level?

Only certain sectors are preferred by IIM graduates
An ideal IIM job would then be a decent salary + an attractive non-entry level designation…but the sector matters. It’s the Finance and Consultancy sectors that IIM graduates prefer…I guess the IIM elite is still a long way off from joining sectors like manufacturing where gestation periods are long and results take longer to come, far longer than the MBA is prepared to put into one organisation! A few years ago it was estimated that less than 5 percent of IIM graduates get into manufacturing. And as for vital sectors of India’s economy such as education and health or transportation and energy, these don’t see much of the IIM’s either.

If that sounds critical, well it wasn’t meant to be. It’s just stating of the facts. I do believe that a person should go where he wants because I don’t like taking moralistic stands as I don’t know what I would have done if I were in their place. What makes me glad however is that the shine on foreign placements has started to fade. It’s great to hear that our very own companies are managing to retain our people.

A new trend of IIM’s social consciousness?
If the craze for foreign assignments is fading, we are also seeing a new trend of IIM grads wanting to chip in with the less popular sectors. One keeps reading of those who have chucked up lucrative offers and are preferring to put their efforts into some sectors that are critical to our nation. For example, this year young Neela Nageshwar Vittal who was offered a salary of Rs1.44 crore turned it down and wants to start a processing unit for medicinal plants:

Vittal is an example of the new India, which is moving upward with dignity and awareness. He has grown up in the slums of Mumbai, when his father was a driver for the Lijjat Papad cooperative. The family’s fortunes improved in time and he went to IIM, Ahmedabad while his siblings became computer engineers.

Then last year there was Neeraj Trivedi from the IIM-Lucknow who decided to dedicate his life for the development of education sector in the country. He wants to find a low cost education model.

These incidents are still a drop in the ocean, perhaps that is why they are reported so widely. But it is a trend.

Just leaving you with a table which gives an idea as to who much IIM salaries have increased over the past year. Table from mbauniverse (click on it to get a bigger image):

Related Reading: Designations matter a lot in India
Will the Reverse Brain Drain become a flood?
More jobs in India, but for a select few
IIM Paychecks 2007
Job discrimination at the workplace
Designers in great demand in India
A promotion makes an IT professional happy for just six months!
India’s has three universities in the world’s top 200
Pay Hikes highest in India in 2007 (as compared to the rest of the world)
The relationship between early schooling and professional success

(Photograph is a stock photo and copyrighted to me)

31 Comments leave one →
  1. July 30, 2008 10:08 am

    Finally, the brain drain situation reverses! Thank god!😀

  2. July 30, 2008 10:29 am

    I quite agree with Nikhil. It is a sign of changing times…Happy to see it!🙂

  3. July 30, 2008 12:11 pm

    Like you said the Indian companies now are at attracting the graduates with good designations, like Associate VP, Senior VP, VP, Senior Manager.. Although the designations sound pretty good, the work might all be the same. Some companies are coming up with weirdest of designations in between levels to give the employee ‘the feel’ of belonging.
    Also if you are getting a huge salary (according to market standards), right here at home why bother to stay and work in a different country.
    Its good to know that the attitudes are changing.
    I personally know people who did not accept permanent onsite offers just to stay in India.

  4. Sakhi permalink
    July 30, 2008 12:11 pm

    yeah, reverse brain drain!🙂

  5. July 30, 2008 12:40 pm

    As a student at an IIM, i can safely say that the decision to pursue a career in India is not just purely dependent on the individual but also on whether the student gets an international offer. While not many on campuses get an international offer, within 2/3 years of passing out most IIM grads (if they desire) end up with international jobs.

    What would be a better measure would be the number of students who are still working in India 2/3 years after passing out from an IIM. Now that percentage would tell you a bigger story.

    An excellent read nevertheless.

  6. July 30, 2008 12:51 pm

    glad about the fact that atleast few people from these elite institutions are venturing into the social sector. It does make a lot of difference and more importantly inspires a lot.

  7. July 30, 2008 1:07 pm

    well itz gud to see the reverse brain drain but itz only for d time being bcoz of slowdown of us economy but studentz still prefer guin to us or aus for a ms degree bcoz facilities n the range of courses out there are not comparable

  8. July 30, 2008 2:31 pm

    Good to see your investigative work ..🙂

  9. vivek mittal permalink
    July 30, 2008 3:39 pm

    Interestingly IIM Bangalore and Lucknow have stopped declaring the salaries offered to their students as they feel they are educational institutes and not placement agencies…and it seems apt too institutes of this repute need not bank upon pay packages offered to their students

  10. July 30, 2008 4:40 pm

    i want to do MBA there if i can…yes i have heard various other stories too of ppl from IIMs turning down packages worth a crore or more….

  11. July 30, 2008 5:39 pm

    Nikhil, welcome back from America.😀

    Amrutha, Sakhi, Xylene, Hari Kishore, Vishal, Vishesh – thanks.

    SaNjAy, true most people cannot get into IIM’s and then they go abroad and then they don’t come back.

    Vivek M, I believe the main reason they stopped was because their students started to get threats.

  12. July 30, 2008 5:57 pm

    Nita:

    Here are 2 more stories of unusual career choices made by IIMA graduates (sorry, I am biased to notice my own kind more than others) in recent years:

    Vegetable vending:
    http://mrintech.wordpress.com/2008/06/28/iim-a-topper-vegetable-vendor/

    Selling idlis (but on a different scale from his mother, who used to sell idlis to help educate him):

    http://mrintech.wordpress.com/2008/06/30/iim-ahmedabad-graduate-takes-on-idli-business/

    Thanks.

  13. vivek mittal permalink
    July 30, 2008 6:09 pm

    Nita i read about that somewhere, at least officially they stated same reason as i mentioned

  14. Ravi permalink
    July 30, 2008 7:33 pm

    It doesn’t really matter if all these graduates stay in India or abroad if they stay and prefer to work for some xyz company. Its like more like a burden to any company to hire too many IIM graduates. It would do more good if they start their own company which allows them to create employment and its really unfortunate that not many of them are into manufacturing which has a potential to create millions of jobs all over India. They cant be blamed cause manufacturing sector develops when universities/companies invest on research. Without doing any ground work its too much to ask from a fresh MBA graduate. We just have to watch how our lame government policy makers would do anything towards funding research in universities.

    Just imagine a graduate student working with an IIT professor happened to invent some new technology and after he graduates starts his own company later he hires an IIM graduate ( he could be a partner too) to increase his production and so his business. Thats the way it works and I wish it would happen very soon like the reverse brain drain.

  15. July 30, 2008 7:50 pm

    It is a charactersitic attribute of Indians or rather Humans in General. We tend to crowd around the area where things are popular. I am not surprised that MBA grads are preferring Finance as their Major as it seems to be popular and therefore a lot of them seem to be going that way.
    On the other hand, it is good to see that a new trend of people are dropping away from high salaries and going towards things that matter more than just the Money.

  16. July 30, 2008 8:28 pm

    one of the major reason why IIM grads stick in india is because when you adjust for PPP, you will realize that 1$ earned in India is worth 4$ in USA…. so a nice 20L INR salary is equivalent to a $200,000 US wages

  17. July 30, 2008 8:52 pm

    Very informative. If I go back and If I had the choice perhaps I would also weigh in the chance to live and work in a new environment and may be value it over the money. It is interesting how business school graduates get these high salaries but I often wonder what exactly it is that they do or study at these business schools. May be I should get an MBA to find out. May be its the brand name that sells I remember once talking with a young student in rural Japan who was just going to join the Kyoto University and even he knew about IIM’s and IIT’s. Apparently he had the idea that everyone in India is a genius at Maths. I assured him that I can not even count with a calculator. As India grows in the future I am sure we as Indians will grow with it and perhaps sometime in the future who won the Miss India contest or who gets paid what after graduating from which business school would never be heard of in the news again. I guess till then we can continue to take pleasure in these trivial things.

  18. July 30, 2008 9:43 pm

    Sreejith, thanks for that perspective. It would be interesting indeed to find out how long the IIM grads stuck it out… only IIM grads themselves would be able to give an approximate idea I guess. btw, your comment had slipped into spam and just fished it out!

    Shefaly, thanks for those links. It’s always good to see things from an IIM’s perspective. Selling idlis and vegetables!!

    Ravi, I agree with you about entrepreneurship. We need more people to do that, but I think the IIM grads get too tempted with the amount of money they are being offered.

    Dinesh Babu, Finance seems to be where the money and they are going like bees to honey! Also results are seen fast in these industries which results in pay hikes and promotions.

    odzer, getting into these business schools is really tough and more than what they do I would say, who are they admitting…? And the way things are only those who are excellent at numbers get in…the academic cream so to day. In fact I believe the admission process is favours engineers.

    Ankur, your comment had gone into spam too…spam filter loves you!🙂 And yep, that point is very valid…dollars count here! And don’t forget the comforts of household help, drivers etc!

  19. Vikram permalink
    July 31, 2008 12:28 am

    odzer, you are right that in the vast rural landscape of India, these students staying back (even if temporarily) is trivial, but for the thousands of students in universities in India, this sort of news is relevant and important. Perhaps, after much contact with Europeans and Japanese you have also started seeing things in black and white.

    As has been mentioned previously in this blog, much of India’s educated and middle classes seem to value money and status only. So if stories like those of Neela Vittal, Kaushilendra, Neeraj and others get some prominence in the media, it perhaps reflects some change in the priorities of these classes.

    Nita, a lot of these graduates might be getting these offers in India simply because of a lack of qualified applicants from other colleges, the skill level of an average Indian graduate seems to be pretty low for now.

  20. July 31, 2008 2:57 am

    Vikram, What I meant is that such news will cease to hold any relevance as the country develops. I did not mean that it is not relevant now. I don’t usually like posting comments on comments. Its a never ending cycle. I apologize for that. Just a clarification. I have the ability to see things in Black and White. I never did imply any positive or negative attribute to it, it is you who seems to have done that.

    Neeta, I find your comment interesting. So its the elimination that matters to the recruiters and not the quality of the curriculum in these institutes? In certain other Asian countries the quality of graduates is also relatively poor but most people who pass out are extensively trained by companies after they are hired. May be that approach can bring some benefits to India as well considering we have a whole lot of them.

  21. saba shaikh khan permalink
    July 31, 2008 5:55 am

    wow, so finally Indians have become GLOCAL…they think global but remain local

  22. July 31, 2008 8:20 am

    Nita, this is a good trend🙂 It is good that the students/alumni of premier institutes want to do something different for the country. Unfortunately, the Non-IIM folks that form the vast majority of the graduates MIGHT not have lucrative offerS to choose from. I think “decent salary+non-entry level role” is a good choice to make. BTW, I just want to know your opinion about the “ceamy layer vs reservation” issue that was/is going on. Or did you already write about this issue? I can still search in your blog🙂

  23. July 31, 2008 11:22 am

    is there a possibility that money is not necessarily a motivating factor ?

  24. July 31, 2008 3:34 pm

    I am not sure if opting for domestic career opportunities represents any major reversal in trends.

    It seems more related to a particular individual.

    It took a student from Bihar to go back to his roots and with a plan that could positively impact a large group there. What is creditable is that Kaushilendra had the courage to dive back into the same well he came from. He is well acquainted with ground realities and is determined to make a difference where it matters.

    I wonder if a Mumbaikar, who probably has never seen what life is like outside the metropolis, would have gone and set up a business in smaller towns or villages or tried to set up a NGO or some such thing.

    It is nice to read about such instances and I hope more students (not just from IIM) take a cue from this
    and decide to strike out a different path.

    This requires plenty of courage, confidence and positive re-inforcement from all concerned.

  25. July 31, 2008 9:49 pm

    Vikram, that’s true, the type of education of many engineering colleges is not up to the mark.

    Odzer,🙂 thanks for returning. You have in fact said something that is extremely important! In fact because in many colleges the teaching is not up to mark companies are now taking it upon them to train, but again this is not happening in a big way and the companies are complaining! Infosys is doing this now, and as a social initiative picking up students from not so good institutes and training them. And as you said rightly, the level of the college depends on the kind of students they take in! This is not to say that IIM doesn’t have a good curriculum, I am sure it does. However, I always doubt the quality of educational institutes who only take in the academically brightest. In fact there are some colleges in Mumbai who take in toppers and these toppers have personally told me that the teaching is not up to the mark. The students study on their own with the help of coaching classes. And as they are bright and motivated, the results of the colleges is good!

    saba
    , thanks.

    Nandu, for some yes, it could well be.

    Manoj, I have written two posts on this issue, one is about whether caste-based reservation has worked, and about the Supreme Court staying OBC quotas, here. And I am against reservation for the creamy layer.

    Mavin, I think there are instances of city people doing these things too.

  26. August 1, 2008 11:46 am

    thats a good news for india .. 🙂

  27. August 2, 2008 1:00 pm

    Thats great news!!!
    Sometimes I don’t understand what do they do with so much money.🙂

  28. August 3, 2008 1:26 pm

    The act of making a career choice based on the salary offered is, at the very best, ridiculous. And becoming a VP or a Senior Manager for a fresher is equally ridiculous. There was a time Hindustan Lever used to hire IIM graduates and they were required to work on the field for the first one year selling (for eg. Soaps) to the roadside shops. It was a corporate policy to expose these youngsters to the work done by the people whom they were supposed to manage. So that they can make informed decisions later on. Maybe these days, the kind of jobs available on the market does not require good skills. Thats one of the negative effects of easy money (read $).

    Destination Infinity.

  29. raju yadav permalink
    March 9, 2012 5:14 pm

    very good

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