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SALARIES 98 The Unkind Cut of 98 Caught in a recessionary squeeze, India Inc. has discovered a new equation for recruiting fresh intellectual capital hot off the hottest B-schools: you can pay less and still get the best. BT dissects the salary trends of campus placement in 1997-98. By Pareena Kawatra
Plummeting sales and profits have provided recruiters a healthy dose of pragmatism for 2 years now. Between 1994 and 1995, the average monthly pay-packet on campuses soared from Rs 8,583 to Rs 12,333--a rise of 49 per cent. One year, and a sputter in the economy later, the growth-rate fell to a modest 16 per cent. Another year on--when companies panicked that the engine could actually seize--the rate of growth, down to a measly 9.60 per cent, raised the salary-average to Rs 15,760. Now, in 1998, the year of stagnation, the average monthly salary stands at Rs 17,416--a near-zero increase in real terms. Agrees Sanjeev Sachar, 38, Director, Egon Zehnder International: "No one expects 50 per cent hikes in campus offers any longer. There was an artificial boom in mba salaries, which have now stabilised." So pronounced is the feeling of cost-consciousness in corporate India that the highest paymasters of the year, Booz-Allen & Hamilton and The Boston Consulting Group, raised their offers by a mere 4 per cent. And 3 of the top-paying recruiters of 1997--McKinsey & Co., A.T. Kearney, and the hcl Group--slashed their pay-packages by between 4 and 7 per cent. To put its finger on the pulse of entry-level compensation this year, BT contacted the placement offices of the Top 25 B-schools on the BT-Cosmode list of India's Best B-Schools, 1998 (See The Best B-Schools, BT, May 7, 1998) for information on the number of offers made and accepted, the salaries offered, the duration of the placement season, and the placement day allotted to each company in the 1997-98 season. With 23 B-schools responding, a master database, covering each of the 358 companies that made job-offers on these campuses, was constructed and analysed. In the study are 5 truths about entry-level recruiting:
All these trends are linked to corporate India's foremost concern: the slowdown. Recruiters are realising that it is better to hire mbas with no prior work-experience and train them to suit the organisation's requirements rather than hiring mbas with track-records, who have to unlearn before they learn. While the two-for-the-price-of-one logic has initiated the move towards dual specialisation, the fact that the shopfloor provides the maximum scope for cost-reduction has made operations the flavour of the moment. And these trends are going to linger even if the recession retreats. WORK EXPERIENCE. While a little experience is a good thing, too much could mar a candidate's placement chances. The rationale? An mba with prior work-experience of 1-2 years is exposed to the real world, and knows how things work in the workplace. But one who has spent a longer period in an office is likely to have specialised in a particular functional area. Worse, such a person comes with all the cultural baggage of the previous company. So, while the average annual pay-package at the Indian Institute of Management, Bangalore (iim-b), for mbas with less than a year's experience was Rs 8.90 lakh, that for those with more than 3 years' experience was only Rs 3.66 lakh. Points out Sameer Mithal, 35, Senior Associate (Human Resources), Booz-Allen & Hamilton: "Experience must be relevant to the work we do." Agrees N.V. Rajan, 39, the Associate Vice-President of the Rs 260.37-crore Infosys Technologies: "Rarely does the work-experience of a student differentiate him from a fresher." CROSS-FUNCTIONAL EXPERTISE. Single-stream specialisation is out; cross-functional skills are in. For instance, the iim-Lucknow encourages its students to specialise in a combination of functional areas such as marketing and finance, finance and systems, marketing and systems, and marketing and operations. Indeed, even specialised B-schools have felt the need to change; the Tata Institute of Social Sciences, Mumbai, for instance, now offers a module in marketing. Evidently, the screams of the impending recession have not gone unheard even in the ivory towers of academia. No wonder the Rs 1,469.28-crore Ranbaxy Laboratories participated in the placement programmes of iim-a, iim-b, and iim-c to recruit mbas specifically for its general management programme. And of the 65 mbas recruited by the Industrial Credit & Investment Corporation of India (1997-98 income: Rs 5,969.86 crore), 40 have dual specialisations in marketing and finance. Explains Rajinder Singh, 51, Vice-President (hr), Ranbaxy Laboratories: "General management skills are gaining in importance as companies are looking for flexible managers." MANUFACTURING SKILLS. Suddenly, the shopfloor has become the springboard for the buttoned-down leaders of tomorrow. Plateauing sales have forced companies to increase their profits--or, at least, maintain them--by increasing their level of Operational Effectiveness. Which is manifesting itself on campuses. Chandan Chowdhury, 37, Dean (Academic), National Institute of Industrial Engineering--14 of whose students found their expertise in Enterprise Resource Planning fetching them plum positions--believes that the trend reflects a move to a more substantive competitive strength. Explains he: "The fall in the number of marketing and finance jobs, and the rise in the number of operations jobs underlines the need to create a value system through a strong operational base." B-SCHOOL REPUTATIONS. Amidst the search for shopfloor sophomores lies the growing reputation of the B-school itself. Stung by the slowdown, the campuses were buoyed by the visit of transnationals which were keen on hiring the cream for their global operations. Eleven globocorps visited the top campuses this year, with India's No. 1 B-school, the iim-a, attracting 10. And the number of students hired for such jobs this year: 78, out of which 64 were from the iims. Moreover, the almost-stratospheric salaries commanded by the top-of-the-class could see the iims becoming suppliers of best-in-class human capital to first-world corporations. For the transnationals, the benefits are two-fold: Indian managers are familiar with the language of international business, and adapt easily to other cultures. Moreover, the best students are not only at par with the best from any international B-school, they come a lot cheaper. The figures bear this out: this year, the annual average opening salary offered by US companies on Indian campuses was $60,000; the corresponding figure on American campuses was 85.70 per cent higher at $111,420 (including bonus, employee stock-options, and moving expenses). Points out Ravi Virmani, 39, ceo, Noble & Hewitt: "The superior quality of Indian students, who are available at affordable salaries, is constantly boosting their demand in the global market." Even companies that have, traditionally, shopped on campuses to people their local operations are restricting themselves to hiring mbas for overseas assignments. The management consultancy firm, Ernst & Young, for instance, has hired a larger number of chartered accountants for the domestic market in 1998 even as it has increased the number of its mba recruits for overseas assignments to 10--up from 3 the previous year. Explains A. Sudhakar, 46, Director (hr), Ernst & Young: "Given the slowdown in the Indian economy, it makes sense to hire mbas for overseas assignments." THE SECOND-TIER B-SCHOOLS. It was waiting to happen. Although salaries at the B-schools fell, companies that could not afford to pay them tapped the ranks of the second-tier B-schools, such as the K.J. Somaiya Institute of Management Studies, Mumbai (BT B-schools Rank: 20), and the University Business School, Punjab University (Rank: 12). While the Rs 13,759.27-crore Reliance Industries continues to pick up students from iim-b, it does not visit any other iim, preferring, instead, to broaden its reach to other schools in the country. Little wonder, then, that, this year, the corporate visited the campuses of the Xavier Institute of Management, Bhubaneshwar (BT B-schools Rank: 13), and the Symbiosis Institute of Business Management (sibm), Pune (Rank: 16), besides the K.J. Somaiya Institute. Many first-time recruiters on these campuses were companies that had hired only from the iims until now. A case in point: the Rs 6,974.27-crore itc, which hired 4 people from iim-a and iim-b last year, but chose to overlook them, and opted for only the xlri and the sibm, from where it hired 3 managers. Two factors can explain this slide: faith in their own training-programmes for fresh recruits, and the belief that it is better to visit more second-rung B-schools to hire the cream rather than limit the search to the dregs from the so-called premier campuses. Explains Ronald Sequeira, 32, Manager (hr), Hongkong Bank: "Companies need to look beyond the iims to fulfil their needs. Students with the relevant skills are not found only there." To meet its intellectual capital requirements, the bank added the Narsee Monjee Institute of Management Studies, Mumbai (BT B-schools Rank: 10), to its list of campuses. Obviously, corporate performance has had a lesser impact on the best B-schools in the country. Rationalisation, moderation, and pragmatism have ensured that while the top campuses were insulated against the depression, academia is, finally, waking up to the call of business. Still, the B-schools are handicapped by the fact that the main factor that drives the demand for their products--a healthy economy--is something beyond their locus of control. As growth eludes corporates, those already loaded with too many managers will seek to rationalise workforces using every means--including a boycott of campuses. To compete in the tough era of total cost management, the B-schools must focus on the customer by tracking his priorities, and supplying whatever he wants even if it means tweaking the curriculum. Only a syllabus of transformation will spell survival--and big bucks for B-school grads in future. ADDITIONAL DATA |
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Compensation continues to contract in the shadow of
the slowdown. Especially at the start of corporate careers. Post-liberalisation ceos who
welcomed young managers with open arms are now tightening their fists while talent-hunting
on campuses for trainees. Three years ago, when business was on a high-growth curve,
B-school grads were effortlessly breaking the salary-barriers year after year. But the
pay-cheques held out as bait to the Class Of 98 reveal that the fount of plenty is drying
up--quickly. 