It is interesting to learn about Indian MBA applicants and their motivations for an MBA. The conversation with Mr. X (An Indian Male Applicant) started through our Facebook Page and recently I had the chance to discuss with him about picking the right MBA Admission consultant.
I was shocked to learn that the candidate was expecting the consultant to pick a school for him. It’s like asking your parents to pick a career or a spouse for you; this is not uncommon in India, and I wondered how any non-Indian consultant will ever understand this cultural disparity. Don't just rely on the consultant's opinion for your future. Do your own research and then contact the consultant.
Unfortunately, majority of Indian applicants will not reach top 50 MBA programs in the world. They fall under:
a) Applicants graduating from tier-2 undergraduate colleges.
b) Applicants scoring below average GPA
c) Applicants with below average GMAT (Compared to other Indian Applicants)
Only 3-5% of Indian MBA Applicants graduates from prestigious colleges like IITs, NIT and other premier Engineering colleges, and has scores within a competitive GPA range. Although GMAT scores of Indian Engineering applicants are in the 650-750 range (a much higher score than other applicants), comparison will be made with other Indian Engineering applicants, mostly IT applicants, who score in the 680-720 range.
Why bother to apply?
Doctor or Engineer
The biggest malaise that Indian higher education has faced post-liberalization is the narrow focus on two professional degrees – Engineering and Medicine. I am one of the victims of this trend, and completed my Bachelors in Technology like thousands of Indian IT applicants every year.
Did the degree help me earn a comfortable living? Yes - to a certain extent. But the steady salary and stability can only last anywhere between 3 to 5 years, until you reach 26-29 age group. That is when you think about career growth, career switching and look for learning opportunities.
MBA for Career Switching
MBA programs have often been marketed as a solution for career growth, and Indian applicants have lapped up this message. There is no doubt that an MBA from a leading university will offer several opportunities for career growth, but the opportunity often depends on the pre-MBA work experience.
After an MBA, a Finance recruiter would prefer someone with Finance background than a career switcher. The illusion that career switching can take place with competitive compensation needs to be broken. For career switchers, accept the fact that, after an MBA, the salary increase will not be 100 or 120% but a reasonable 30-50%.
But for applicants who were cheated into the limited “Doctor or Engineer” paradigm, this is a better solution. The sacrifice on compensation has to be made for career switching. When applicants look at an MBA as a “Get Rich Quick Scheme,” ROI calculations falls short of expectations.
Cost, Currency Fluctuation and Interest
The total cost for top MBA programs (2-Year) is in the range of $140,000 to $170,000 . If you evaluate the MBA Return on Investment based on net present value, top MBA programs like Stanford & MIT can give returns of $40,000-$50,000 only after three years. For other schools positive return on investment can only be expected after 5 or 7 years.
Currency fluctuation is a new factor that has impacted Indian economy. As we had mentioned in “Currency Fluctuation is not a Blip but a trend that can last for two years”, the currency fluctuation started in mid-2011, and is expected to continue for another 2-years. MBA candidates applying for a loan should consider this factor while evaluating ROI. For returning Indian MBAs receiving finance from school supported Funding house in $ and €, this is a cause of worry. As interests are deducted initially from the salary, the short-term currency fluctuation will add to the burden, and additional interest not calculated initially will have to paid by the MBAs.
As Pawan Gupta has mentioned on the ease of accessing the fund if you are part of a premier institute like MIT ($170,000 from MIT Federal Credit Union), the interest rates for applicants without a co-signer is 6%. This seems fair, considering the post-MBA median base salary($118,500) for MIT MBA students. But the interest rates can quickly add up if plans change and applicants decide to come back to India. The pay scale varies based on location.
Post-MBA Location Goals & Loan Interest
Indian applicants should understand that to get a positive ROI within 3-5 years, they have to look for opportunities in US or Europe. Indian MBA Applicants who passed out during the worst recession in 2008-09 will attest to this fact. It was not that they were inferior to rest of the job seekers, but several qualified applicants were chasing a few coveted openings in consulting & marketing. Finance openings were non-existent as Banks triggered the collapse, and some of the leading investment banks were going bust. Indian MBA students were forced to return to their previous job functions with marginal increment in salary. Most loan programs have a grace period of 6 months but if the MBA student returns to India, ROI period can drastically change from 3-5 years to 5-7 years.
Changing Family Commitments
Most Indian applicants are in the 26-29 age group – a time when family commitments changes with marriage and children. The additional responsibilities will impact ROI not based on the opportunities that MBA program offer but due to the travel restrictions that family commitments impose. In a global economy, the job offers are not restricted to US, and depending on the industry, travel requirements changes. Many viable offers that would allow applicants to get positive ROI in 3-5 years will have to be passed on due to family commitments.
MBA - Buying Experience
For applicants who go by the logic that an MBA will allow them to buy experience, understand that there is a cost associated with this shortcut, and it is variable.
For those applicants who are interested in the learning opportunity and long-term benefits of an MBA, it is worth spending 6 months to 1-year on your MBA Admission process, and another 1-2 years on an MBA. Otherwise, it’s a huge distraction from your full-time employment.
“Investment on an MBA is subject to market risk. Please learn about the School’s reputation, Recruiter Profiles, Funding Terms, and Learning Opportunities before investing”
Image Credit: leroys
2019 MBA Research Guide - Choose your MBA
F1GMAT's Comprehensive MBA Research Guide will teach you how to select MBA programs through a bottom-up approach.
Articulating your Post-MBA Goals and Career Path is the FIRST step. Which program will give you that hike in Salary, Switch in Career, Change in Location or Job Satisfaction?
We cover them all through our extensive analysis.
+ How to Choose the Best MBA Program: Factors to Consider
Define Post-MBA Goals
Pick your Path: Generalize or Specialize
Use Moral Algebra Method
Use Multi-Attribute Utility Theory
Understand the Top 5 Risks
Measure MBA Career Service Team's Effectiveness
Use Bookending to Calculate MBA Admission Chance
Use Net Present Value to Calculate MBA Return on Investment
Don't Fall for the Mere Exposure Effect
Best Practices to find the truth in MBA Information Session or MBA Tour
Comprehensive MBA Research Guide: Includes Top MBA Programs by 19 Specializations:
+ General Management
+ Operations Management
+ Supply Chain Management
+ Luxury Management
+ Information Systems
+ Hospitality Management
+ Leadership Development
+ Military &
+ Top MBA Program Ranking
Top 20 MBA Programs - Tuition Fee (2018)
Top 31 MBA Programs in United States – Total Cost & Salary (2017)
Top 60 MBA – GMAT and GPA (Average & Median)
Top 20 European MBA Programs - Tuition Fee, Total Cost & Salary
Top 20 European MBA Programs (Based on Actual Salary Increase)
Top 20 European MBA Programs (Short-term return on investment)
Top 20 Affordable European MBA Programs
Top 10 MBA in UK – Salary & Fee (2018)
Top MBA Destinations Based on Happiness Index
Top MBA Destinations based on Innovation Index
Top 10 MBA Job Markets based on Cost of living and Purchasing Power
Top MBA Destination: By Economy
+Comparisons - Top MBA Programs
Wharton vs. Columbia MBA (2018)
MIT vs. Stanford MBA (2017)
Haas vs. Ross MBA (2018)
Kellogg vs Ross MBA
Booth vs Wharton MBA
MIT Sloan vs Tuck MBA
IMD vs. INSEAD MBA (2017)
IIMA vs. ISB (2017)
+ MBA in France (2018)
Top Industries in France
Top MBA Programs in France
+ MBA in the UK (2018)
Top Industries in the UK
Top MBA Programs in the UK
Scholarships in the UK