There was a period in the mid-eighties and the early nineties when a major chunk of the students going to the USA for higher education opted for Computer Science Engineering and related courses. Post the ‘dotcom bubble burst’ and after the craze for engineering died down a new attraction in higher education was born! The craze for the MBA - a coveted degree flaunted by top-notch management professionals and company head honchos. For a long period of time an MBA from a coveted American university was a sure-shot way to land a high-paying job in India. Things are changing slowly with some excellent business schools coming up in India itself and alternate options to do an MBA in Australia and Singapore, which are comparatively less expensive.
This article will examine the costs of studying for an MBA in the USA; what sets apart an American MBA, job-prospects and average salaries and if an MBA from the USA is relevant in the current economic down-turn.
The Famous Five:
As per the ‘Forbes’ Rankings’ the Top Five Business Schools in the USA are:
1. Stanford Graduate School of Business
2. Harvard Business School
3. Kellogg School of Management - Northwestern University
4. Columbia Business School
5. Tuck School of Business - Dartmouth College
Cost of the MBA
Incorporating tuition, living, food, medical insurance, transportation, accommodation, books and entertainment an MBA in any of the premier institutions in the USA will cost roughly between $88,000 and $95,000 per year. Some institutions include a ‘study-trip’ as part of the MBA program, which will involve travelling to another country; the costs associated with the study-trip are independent of the costs mentioned above.
Now let us look at the cost of an MBA in some of India’s premier business schools. Even before we reach that; let us consider a vital factor - the path to the MBA. Typically in India, most students complete a four-year engineering program; land a job in a technology firm work for two to three years; prepare for the GMAT and write the exam and then do an MBA.
Now just stop for a moment and think! If the end result was to study for an MBA; did the engineering degree serve its purpose?
Unless the student actually joined a job related to his / her core area of engineering study the four years of studies and the money spent do not serve a purpose. Research has shown that in spite of doing an engineering course in a subject stream like mechanical, electrical / electronic or civil engineering; nearly 65% of these students land up in an IT-job.
So students plan your future carefully, if your ambition is to do an MBA; a regular three-year degree in Commerce or Economics followed by the GMAT and an MBA is equally effective.
The Indian Institute of Management - Ahmedabad is India’s top-ranked business school followed by - IIM - Calcutta, XLRI - Jamshedpur, The Faculty of Management Studies (FMS) - University of Delhi and ranked fifth is IIM-Kozhikode. Among these institutions the FMS charges the least as tuition fees as it is part of a government-funded university. Studying at any of the premier IIMs would cost roughly between Rs 8.75 and Rs 15 lakhs as the tuition fees. Plus based on the location; living costs would range between Rs 3 to 6 lakhs. In essence, Rs 20 lakhs should see a student through an MBA program in India’s premier IIMs.
Average Salaries for Toppers of MBA Programs in India:
Students from India’s top B-schools get recruited on-campus by top companies from India and abroad. The average annual pay-package offered by Indian companies was between Rs 18.50 lakhs and Rs 20.50 lakhs. The average annual pay package offered by international companies ranges between US$100,000 and US$120,000. Click here to read a detailed article from ‘The Indian Express’.
The numbers speak for themselves; an MBA from India’s premier business schools costs less than half of what an MBA would cost in the USA. Proportionately the average salaries earned by students passing out with an MBA from America’s premier institutions are three to four times more than what their Indian counterparts make.
Economies of Scale - Making the Fees Count:
In essence, if you are spending Rs 25 lakhs to complete your MBA; fees, food, travel, books, accommodation all inclusive and you get placed with a top Indian firm for an average annual pay of Rs 18 lakhs, you have recovered nearly 70% of your investment. Within a couple of years following a confirmation appraisal, based on your performance at work, your pay-package will increase. If you are lucky to be placed in an international company, with an option to work abroad then your annual pay package could be in the range of US$100,000 - straight away you recover in excess of what you paid for your course. Thus it proves again that studying for an MBA in a leading B-School in the USA and completing the program with a good academic score is the right path to succcessful and well-paying career.
Studying abroad does not always guarantee that one will get a job abroad. Many students do not secure a job abroad and return to their home country to find a job. Job-recruiters look at such candidates with great care and two questions emerge:
If the candidate is really good why he/she did not find a job abroad?
Since the candidate has a foreign degree as a recruiter how much extra would the company have to pay a candidate from an Indian B-school with a similar skill-set?
‘Fortune favours the brave.’
If you are confident, with at least a few years of work experience prior to the MBA and some savings in your bank account; take the plunge and go for an MBA from a premier US institution. Note with well over 200 plus leading business schools in the USA the competition to get into the top-10 is pretty tough. So study well, ace your GMAT and pursue your American MBA dream!
Click here to view a list of American institutions offering the coveted MBA program.
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