Finally, the placement season of ‘Top’ Indian MBA grads has begun (or, shall I say, ended the way it’s been projected that all have been placed already?). And with the placement seasons come eye-popping Salary figures as headlines in major newspapers. I never could understand the real reason for the major Institutes or major dailies to showcase these numbers.
Complications of Cross-Currency
Firstly, converting USD to INR in itself is a big distortion of facts. Converting foreign salaries to Indian Rupee brings in certain inherent anomalies. When we convert foreign salaries to Indian Rupees the amount may look huge but this is a salary earned at a different place having different set of expenses then home country.
Salaries are relative, geographically and culturally both, to the country where they are earned. This aspect connotes to having a totally different Purchasing Power Index (PPI), an aspect that takes backseat when cross-currencies gets converted with difference in their respective values.
For instance, as per calculations on salary differential deviations of cross country PPI, an employee with In-hand Salary of Rs.1 crore in New York is equivalent to Rs.45 lakhs in New Delhi in term of lifestyle and purchasing power parity.
Complications of Salary Structures
Secondly, no break-up of salary / perks / allowances are provided to adjudge as to what will be the real take home of the person. And, further, we rarely get to see the level of experience the student has brought in before his MBA and the position offered to candidates to which these salaries are offered.
To put it briefly: Don’t believe what you are "made" to see.
The actual in-hand income will no where be near the numbers portrayed in media. There are various factors that go in before a Cost -to-Company (the one shown in media) translates into actual take home. A salary of 9.6 lakh per annum almost always never translates to Rs.80, 000 in one’s bank account per month.
Anomalous Cost-To-Company Accounting
First and foremost the Salary projected by the Companies is Cost-To-Company (CTC), that is, the amount the company will likely be spending on the employee and this could include anything from training in Bahamas (which you don’t need) to a Laptop which the employee might have to return when leaving the company.
Secondly, there could be pay-outs which are one time, for example, joining bonus, relocation expenses, amount which will not be coming to the employee year on year. Now, these may vary vaguely from company to company, as a result the figure of Average Salaries of B-Schools doesn’t hold much significance as sometimes a person having lower CTC from a certain Company gets to take home more then a person with higher CTC of some other Company just because the way company structures its pay.
Let me give you an example, a person being offered a CTC of 6 Lakh might have taken home of Rs.40, 000 per month and the rest would be adjusted towards Bonus (which may or may not come depending upon various parameters) or the case of an offer of Rs.9.5 lakh per annum, where the take-home after taxes is only Rs.45, 000 per month as the company “pays” the rest in form of a house or trainings.
Similarly, stock options are freely doled out but these will not come in hand till they are actually vested, which could mean a wait of three-five years.
What actually seems to be the need of the hour is a holistic approach to viewing these 7 to 8 figured salaries. It’s high time that either the B-Schools or the media provide the complete picture or stop this annual jingoistic exercise of showcasing these exorbitant salaries as eye catching news
Trust me, for salaries "The beast lies in the details!!!”
Do you agree?