A recent trend is casting a shadow on the future earnings of graduates from India’s prestigious Indian Institutes of Management (IIMs). While the pandemic-fueled talent war led to a surge in salaries, the median pay for the 2024 batch has either stagnated or declined in some cases. This unwelcome development, coupled with rising fees at these institutes, is raising concerns about the return on investment for aspiring management professionals.
The economic uncertainty, particularly the ongoing global wars, has contributed to the volatility in the job market, according to Debashis Chatterjee, director at IIM-Kozhikode. He suggests that while predicting future salaries is challenging, a persistent stagnation could be a cause for concern.
The cooling global economy is exacerbating the situation. IIM-Kozhikode reported a median salary of 27 lakh for the 2022-24 batch, unchanged from the previous year. While this is higher than the 26.5 lakh earned by the 2020-22 batch, it reflects the cautious hiring sentiment.
Similar trends are observed across other prominent IIMs. IIM-Lucknow’s median salary for the 2024 batch dropped to 27 lakh from 30 lakh in 2023 and 29 lakh in 2022. IIM-Indore saw a decline to 24.5 lakh from 27.2 lakh in the previous year, though comparable to 2022’s figures. IIM-Bangalore also exhibited a similar trend, with a median compensation of 32.5 lakh for 2024, down from 33 lakh in 2023 and 31.2 lakh in 2022.
Experts believe that the slowdown in the IT sector and a tightening of purse strings by venture capital and private equity firms have contributed to the subdued salary growth.
To address the changing landscape, IIMs are reviewing their curriculum to ensure better alignment with industry needs and to attract recruiters beyond the traditional sectors like investment banking. Narayanan Ramaswamy, partner and head of the education and skill development practice at KPMG India, anticipates a slight uptick in median salaries for the 2023-25 batch, followed by a more significant increase for the 2024-26 batch.
The stagnation in median salaries is particularly concerning considering the hefty fees charged by IIMs. A two-year MBA at IIM Ahmedabad now costs 26.5 lakh, significantly higher than the 25 lakh and 24.61 lakh paid by previous batches. IIM Bangalore has also increased its fee to 26 lakh for the 2024-26 batch, up from 24.5 lakh for the previous cohort. IIM-Indore, after keeping its fees unchanged during the pandemic, has increased them to 20 lakh from 16 lakh, reflecting the rising operational costs.
While IIMs are justifying the fee hikes by citing inflation and increased infrastructure needs, students are facing mounting financial pressure. Many rely on educational loans to finance their MBA programs, and the stagnant salary growth raises concerns about their ability to repay their debts.
The current situation highlights the need for IIMs to adapt their curriculum and engage with companies across various sectors to ensure that their graduates possess the skills and knowledge sought after in the evolving job market. The focus should be on developing graduates with a combination of management skills and expertise in futuristic technologies like AI, a combination that is increasingly in demand by employers.
In the coming years, the median salary will likely remain constant, with recruiters placing greater emphasis on graduates with a blend of management acumen and cutting-edge technological skills. This signals a shift in the job market, demanding that IIM graduates not only master core management concepts but also embrace the rapidly evolving technological landscape.
