IIM grads get a reality check in a tight job market

For students at India’s top management institutes, there is another reminder of a tight job market.

Median pay—what a middle-ranked candidate would get—has stagnated. In some cases, for the batch of 2024 at Indian Institutes of Management (IIMs), it has even dipped. However, these colleges have increased fees for upcoming batches citing rising costs and changes needed in infrastructure.

“The stagnant median pay reflects the volatility in the market and even now, global wars are on,” said Debashis Chatterjee, director at IIM-Kozhikode, referring to economic uncertainty. “It will be difficult to predict the salaries for the upcoming batch but if the median remains same over few years, then it is a cause of worry."

For IIM grads, who land jobs at multinational corporations and India’s top domestic firms, the unchanged payouts sober down expectations. This comes after a talent war towards the end of the pandemic spurred pay hikes, causing an unprecedented churn, dubbed the Great Resignation.

Cooling economy worries

Concerns about a cooling global economy only make it worse.

The median salary at IIM-Kozhikode was ₹27 lakh for the batch of 2022-24, unchanged from the previous 2021-2023 group, but higher than ₹26.5 lakh for the students of 2020-22 session.

The institute, which last worked upon its course in 2020, is again reviewing it to improve engagement with companies so that placements do not suffer, "irrespective of the markets", said Chatterjee.

The campus placement reports of some of the older IIMs also show a dip in the median compensation. IIM-Lucknow's batch of 2024 got ₹27 lakh versus ₹30 lakh (2023) and ₹29 lakh (2022) in previous years.

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Median pay offered to graduates had risen right after the pandemic when companies were hunting for top talent. Those graduating in 2023 reaped the gains. But campus placements felt the ripples once the firms were satiated and the global job market turned uncertain due to wars, venture capital and private equity funds tightened their purse, and IT sector cooled.

IIM-Indore’s median pay illustrates this well: The payouts at the institute fell to ₹24.5 lakh for 2024 from ₹27.2 lakh in 2023, but are comparable with offers made in 2022 ( ₹24.09 lakh).

IIM-Bangalore showed a similar trend with a median compensation of ₹32.5 lakh for the batch of 2024, compared with ₹33 lakh (2023) and ₹31.2 lakh (2022) in the two preceding years.

Marginal, if at all

"The B-schools will have to look beyond the usual investment banks and will see recruiters coming in from manufacturing, banking, chemical, electronic and the EV sector,” said Narayanan Ramaswamy, partner and head for the education and skill development practice for consulting firm KPMG, India. “The batch of 2023-2025 is expected to see a marginal uptick in the median salaries while those graduating in the batch of 2024-2026 will see an upswing.”

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IIM-Ahmedabad, where median pay was stagnant at ₹31.58 lakh and ₹31.59 lakh in 2023 and 2022, respectively, has not updated its placement report for the batch of 2024. IIM-Calcutta, which is also yet to release the latest numbers, saw the payouts rise from ₹31 lakh for the batch of 2022 to ₹33.67 lakh in 2023.

Key indicator

The median salary becomes an important indicator as crore-plus salaries are few and far between. Most students from IIMs take educational loans to fund this programme.

A two-year MBA at IIM Ahmedabad will cost fresh students--enroling in 2024-- ₹26.5 lakh versus ₹25 lakh and ₹24.61 lakh in the previous two years, respectively.

IIM Bangalore increased the fee of its two-year MBA programme to ₹26 lakh this year (2024-2026) from ₹24.5 lakh for the previous batch.

“The fee structure is reviewed internally by the dean-programmes and the chief financial officer, taking into consideration programme costs, effects of inflation, etc. An increase is effected, if required,” said IIM-Bangalore in an emailed response.

The largest spike among the older IIMs came at Indore, which hiked its fee after three years. "The fees had remained unchanged during the Covid-19 pandemic, necessitating an adjustment to keep pace with rising operational costs," said Himanshu Rai, director at the institute. Students who enrolled for 2022-24, 2023-25 and 2024-26 batches had to pay a fees of ₹20 lakh versus ₹16 lakh paid by the group of 2021-23.

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IIM-Kozhikode said the increase factors in "incremental costs in living conditions, increase in number of faculty members, maintenance of hostels and infrastructure/facility support to students”.

Companies from consulting , FMCG, banking and e-commerce sectors, besides conglomerates and public sector units, recruit management graduates but with preference for students with work experience.

For most students who fund their MBA through education loans, payouts may not rise in coming years, according to Brajesh Singh, president at management consultant Arthur D. Little India. The consultant typically offers ₹30 lakh to students from older IIMs, but payouts vary with profile.

The median salary is expected to remain constant, Singh said, and recruiters will look at IIMs for grads with a combination of skills in management and futuristic technologies like AI.