Every year ,thousands of MBA aspirants in India sit down with a spreadsheet of B-schools, a
list of average packages, and a growing sense of confusion. There's one college
that boasts a highest package that appears more like a lottery win. Another
promises “100% placements.” A third centers around a discussion about the
alumni network and future growth. In all this clutter, you need to make a
decision that involves spending anywhere from ₹10 lakh to ₹30 lakh, and two
years of your life.
The question isn't
"which college's placement brochure is the flashiest. The debate of ROI of
MBA vs placements is well on again and it is important to know the difference
between the two so that you don't make a costly mistake. In an institution such
as FOSTIIMA Business School, where emphasis is placed on career results in
addition to academic rigor, this is a consideration that is strongly urged
against before enrolling.
This will explain the
meaning of each term, the difference between them and how to assess Indian
B-schools for the long haul.
2. Why Placement Statistics Can Be Misleading
Anyone who reads a placement report should be aware how the
numbers are often presented.
• The “highest
package” trap. It is typically an outlier, it may be one student, it may
be one international, it may be one that includes joining bonuses, stock
options, relocation allowances – you get the idea. It provides virtually no
information you can expect.
• Average vs. median. A couple of
particularly large packages can greatly raise the average. The median is the
salary that is in the middle of all the salaries; it is a more accurate
representation of the typical student. Always request both.
• “100% placement”
claims. The meaning of this phrase is numerous. Are students who
chose not to be placed included? Are internships countable as employment? Does
it feature offers from affiliated companies of the college? Does it include
only the registered students for placements or the entire batch?
• Role quality. The person's job is
more than just a number. Does it involve a sales, operations, consulting,
finance or analytics job? Is it a management position or a glorified field
sales position? Two students, having the same income, may develop entirely
different careers.
• CTC vs. in-hand
salary. When you look at the salary to Company aspect, it is quite
likely to feature variable pay and performance bonuses, as well as benefits
that can be uncertain. A CTC of ₹12 lakh may mean much less in guaranteed fixed
pay.
3. How to Calculate Your Own MBA ROI
Don't have to be a financial professional to calculate ROI.
A quick and easy structure is all that is needed.
Step 1: Work out your
total investment.
• Total tuition and
program fees
• Hostel, food, and
living expenses
• Study materials,
travel, and miscellaneous costs
• Opportunity cost,
meaning the salary you would have earned if you had kept working for those two
years (relevant if you’re a working professional)
Step 2: Estimate your
realistic post-MBA earnings.
Take the median package,
NOT the highest. Next, elicit from alumni what they have earned in year 3 and
year 5. It's more important that someone's pay rises over time than that they
begin on a high salary.
Step 3: Calculate the
payback period.
Calculate the sum of
investment divided by incremental salary, the post-MBA salary minus what you
would have been earning without the MBA. If you get 4-5 years or less, the ROI
will likely be healthy. Any program longer than seven or eight years should be
evaluated.
Step 4: Factor in the
intangibles.
Not all returns are
reflected on a spreadsheet -- better professional network, change of career
because you didn't have it otherwise, entrepreneurial confidence, leadership
abilities, and credibility in the job market.
4. Key Factors to Evaluate Beyond the Placement Report
Comparing MBA ROI and placements involves examining what
drives good results, not just the results themselves.
• Curriculum relevance.
Is the program offering what industry actually needs today, like data
analytics, digital marketing, supply chain, fintech, business strategy? Do they
keep up to date with the curriculum or has it remained unchanged for 10 years?
• Faculty quality.
Search for a combination of academics and industry professionals. The knowledge
of faculty who have experience in the corporate world is something that cannot
be found in textbooks.
• Industry exposure.
Live projects, internships, guest lectures, industry visits and simulations are
all a part of the learning process that helps you develop skills that are
valued by interviewers. Your employability is probably being invested in a
school that puts these at the heart of the programme, instead of at the end.
• Alumni network. The
first job is not the last! A strong network of alumni can also provide
opportunities for employment, mentorship and business connections over a period
of 20 years. Talk to some alumni from various batches to know the involvement
of the network.
• Peer quality. Much of
the MBA education is experiential, through classmates. The diversity of
backgrounds, their work experience and their ambition from their peers up the
quality of each discussion.
• Accreditation and
recognition. Verify approvals by AICTE or UGC, and search for accreditions like
NBA, NAAC and AACSB based on institution. These have a negative impact on the
degree's credibility, particularly when the intention is to study or work
abroad or in multinational companies.
• Location and corporate
access. The quality of internships, guest faculty and recruiter visits can be
affected by the location.
5. Matching the B-School to Your Career Goals
The best B-school is not a one-size-fits-all. It depends on
you and your goals.
Placements and
internships become more important if you are a fresher without work experience
as your first job forms the groundwork. Seek managerial buy-in, training and
mentoring.
• If you're a working
professional, you may be looking for a career change, a leadership position, or
a promotion. You don't need only campus placements to maximise ROI; skill
building, networking and brand value are also important. There may be better
returns in the executive and part-time programs because you are still working.
• If you are aspiring to
become an entrepreneur, you need incubation support, mentorship, access to
funding, and an ecosystem of entrepreneurs rather than just recruiters.
• If you're aiming for a
certain sector like banking, consulting firm, marketing or HR, then see if the
college has a history and connections in that space.
• If it is a financial
issue, a medium priced school that has a pretty good record of placements could
be better than a high-priced school that leaves you with a huge loan. Many students
come to the conclusion that an EMI burden limits the career options for which
an MBA was intended.
6. Red Flags and Green Flags When Choosing a B-School
Red flags:
• Placement claims that
lack data and/or third-party audits
• Heavy focus on the most
expensive package with no reference to the median package
• The need to pay a
substantial amount of deposit at the outset.
• Avoids talking to
alumni or current students about you
• A lack of relevance in
curriculum and little industry engagement.
• Indirect responses to
fee questions, loan information or refunds policies
Green flags:
• Clear and concise
placement reports that provide both median and role-wise information.
• Active alumni who
respond freely and truthfully
• Excellent internship
opportunities and real-world assignments.
• Faculty that have
first-hand experience of the corporate sector.
• Career support: resume
workshops, mock interviews, mentoring
• Sensible pricing –
there is a clear pathway to recoupment
• Final Thoughts: Make
the Decision with Both Eyes Open
The MBA ROI vs
placements debate is not one or the other. There's a reason why placements are
important; a good job is the best-looking return on investment. The larger lens
is ROI, however. It considers whether the cumulative effort, expense and time
required will be worth it over the next ten years, and not the next season of
campus visits. When you are comparing the best institutes or considering new
ones like FOSTIIMA Business School, trust the facts, have a real conversation,
and follow your own career vision, not the marketing hype!
Frequently Asked Questions (FAQs)
1. What is the difference between MBA ROI and placements?
Placements are the job
offers received by students during campus recruiting. ROI is defined as the total
dollar/career return divided by the total dollar/career investment of the MBA
(fees, living costs, opportunity costs). Placements are not the end of the
story when it comes to ROI.
2. Which is more
important when choosing a B-school: ROI or placements?
ROI is the fuller of the
two, taking into consideration your costs as well as your profits. A high
package from a costly program can result in low ROI, but strong placements can
lead to good ROI.
3. How do I calculate
a good MBA ROI in India?
Calculate your total
expenses such as expenses, house expenses, and lost income. Then divide this by
your projected annual salary growth to estimate payback. Consider a three to
five year pay back as healthy.
4. Should I trust the
“highest package” mentioned by B-schools?
Handle with care. A very
few students will typically be covered by the highest package. For most, think
of the average package, and even think of the lowest package.