Double whammy for Indian graduates: How IIMs are hiking fees but first pay drops

Students at India’s top management schools are bearing the brunt of a tight job market. After a slow placement season at the Indian Institutes of Management (IIMs) this year, median pay has stagnated.

The median wage is what a middle-ranked candidate would earn. It is the amount between the highest and lowest salary of workers in a specific occupation.

What is going on? Let’s understand.

Tough time for IIM graduates 

As per a Livemint report, the median salary at IIMs has become static and even dropped in some cases for the 2024 batch.

The median salary at IIM-Kozhikode was Rs 26.5 lakh per annum for the 2020-22 batch. It increased to Rs 27 lakh for the next batch and remains the same for the 2022-24 group, noted the newspaper.

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The median annual salary stood at Rs 32.5 lakh at IIM-Bangalore for the 2024 batch, a drop from Rs 33 lakh in 2023. The median compensation was Rs 31.2 lakh for students of the 2020-22 session.

A similar scenario was seen in IIM-Indore. The median pay dipped from Rs 27.2 lakh in 2023 to Rs 24.5 lakh for the 2024 batch.

In IIM-Lucknow, the median wage was Rs 27 lakh for the 2024 batch, down from Rs 30 lakh in 2023 and Rs 29 lakh in 2022.

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For IIM-Ahmedabad students, the median pay was stagnant at Rs 31.58 lakh and Rs 31.59 lakh in 2023 and 2022, respectively. The top business school is yet to release the number for 2024, reported Livemint.

The latest figures are not out for IIM-Calcutta either. The management institute had a median salary of Rs 33.67 lakh in 2023, a jump from Rs 31 lakh for the 2022 batch.

As per the Livemint report, the 2023 batch benefited from the increased median wages as the companies went on an over-hiring spree after the pandemic. However, campus placements felt the effects of a forecast of a global economic slowdown as the job market turned uncertain due to wars.

“The stagnant median pay reflects the volatility in the market and even now, global wars are on. It will be difficult to predict the salaries for the upcoming batch but if the median remains same over few years, then it is a cause of worry,” Debashis Chatterjee, director at IIM-Kozhikode, told Livemint.

According to Brajesh Singh, president of management consultant Arthur D Little India, the median salary is expected to be constant for IIM students, noted the financial newspaper.

Rising costs sting IIM students

While median pay has remained stagnant or even plunged, the IIMs have enhanced fees for the upcoming batches citing rising costs.

Students enrolling at IIM Ahmedabad for a two-year MBA this year will have to shell out Rs 26.5 lakh. The fees were Rs 25 lakh and Rs 24.61 lakh in the previous two years, respectively, as per the Livemint report.

IIM Indore increased the fees to Rs 20 lakh for the 2022-24, 2023-25 and 2024-26 batches, a hike from Rs 16 lakh paid by students of the 2021-23 group.

“The fees had remained unchanged during the COVID-19 pandemic, necessitating an adjustment to keep pace with rising operational costs,” Himanshu Rai, director at the institute, told the financial newspaper.

IIM-Bangalore is charging Rs 26 lakh from students of the 2024-2026 group, compared to Rs 24.5 lakh from the last batch.

ALSO READ: Why IITs are struggling to get students placed this season

Slow placements this year

IIMs had a slow placement season this year. Officials and students told Economic Times (ET) in January that it was turning out to be the “most difficult ever” to get jobs for IIM students of Ahmedabad, Bangalore, Calcutta, Lucknow, Indore and Kozhikode.

Consulting firms, which are among the top recruiters at IIMs, slashed the number of offers. To mitigate the impact, institutes tapped into their alumni network to get all students placed.

While the older IIMs like Calcutta, Ahmedabad, Lucknow and Bangalore usually achieve 100 per cent placement by the first phase, it took longer than usual for students to get hired this year.

Prospects improved by the last phase of the placement season. As per a News18 report in February, recruiters, especially in the tech sector, were open to hiring after the narrative around the global economic slowdown lost steam.

Even though placements gained pace, median salaries remained less compared to 2023.

“Although it’s a positive sign that more offers are being made in the final phase, the median salaries remain low and are non-comparable to previous years. Even during the pandemic, the institutes managed to get higher pay packages. There is a sharp drop in the average CTC offered by major recruiters in many of the third-generation IIMs,” a placement executive told News18.

IIMs were not the only ones hit by economic uncertainty. India’s top engineering colleges – Indian Institutes of Technology (IITs) – also struggled to get students placed this year. A CNBC report in May citing data collated by IIT-Kanpur alumnus and placements mentor Dheeraj Singh mentioned that 8,000 IITians – 38 per cent of students who registered for campus placements – were yet to be hired in the 2023-24 placement drive.

With inputs from agencies