This article goes in depth to explain why Return on Investment (ROI) is an important aspect to consider while choosing an MBA programme, how to calculate ROI, and the other non-financial returns which one should research before joining B-School.
This article goes in depth to explain why Return on Investment (ROI) is an important aspect to consider while choosing an MBA programme, how to calculate ROI, and the other non-financial returns which one should research before joining B-School.
One common aspect that is considered when people contemplate on and evaluate MBA programs is the Return on Investment (ROI), the reason simply being that an MBA or PGDM is an expensive programme. Also, the fee and costs associated with MBA programmes are increasing at an exponential rate.
Let us first understand what ROI is. According to Investopedia, ROI is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments.
The investment/cost of an MBA program typically comprises the following components:-
One should ideally take the following factors into consideration while calculating the financial ROI of an MBA programme:-
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The table below shows the fees and initial salaries offered by some of the leading MBA colleges in India. However, while reading through the table, a few points may be kept in view:-
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Name of MBA College | Fee | Initial CTC - Median Salary | Payback period | Source | ||||
Year | Amount (Rs/ Lakhs) | Year | Amount (Rs/ Lakhs) | Number of months | ||||
IIM Ahmedabad | 2021-23 | 23.00 | 2021 | 24.50 | 11.27 | www.iima.ac.in | ||
IIM Bangalore | 2021-23 | 24.50 | 2021 | 28.60 | 10.28 | www.iimb.ac.in | ||
ISB, Hyderabad* (Fees - Rs 36.50 lakhs) | 2022-23 | 16.25 | 2021 | 27.00 | 7.22 | www.isb.edu | ||
IIM Lucknow | 2021-23 | 19.25 | 2022 | 29.00 | 7.97 | www.iiml.ac.in | ||
XLRI Jamshedpur | 20.50 | 2022 | 30.00 | 8.20 | www.xlri.ac.in | |||
SP Jain Institute of Management & Research | 2021-23 | 19.00 | 2022 | 30.10 | 7.57 | www.spjimr.org | ||
IIM Indore | 2022-24 | 21.24 | 2021 | 22.60 | 11.28 | www.iimidr.ac.in | ||
IIM Kozhikode | N.A. | 20.50 | 2022 | 26.50 | 9.28 | www.iimk.ac.in | ||
FMS, Delhi University | N.A. | 2.00 | 2022 | 32.40 | 0.74 | |||
MDI Gurgaon | 2021-23 | 16.00 | 2022 | 23.50 | 8.17 | www.mdi.ac.in | ||
IIFT, New Delhi | 2021-23 | 21.48 | 24.00 | 10.74 | www.iift.ac.in | |||
Jamnalal Bajaj Institute of Management Studies | N.A. | 6.00 | 2022 | 26.48 | 2.72 | www.jbims.edu | ||
IIM Rohtak | 2022-24 | 17.90 | 2022 | 15.00 | 14.32 | www.iimrohtak.ac.in | ||
IIM Jammu | N.A. | 15.55 | 2022 | 12.75 | 14.64 | www.iimj.ac.in | ||
IIM Udaipur | 2022-24 | 13.10 | 2022 | 15.60 | 10.08 | www.iimu.ac.in | ||
SIBM. Pune | 2022-24 | 21.28 | 2022 | 20.80 | 12.28 | www.sibm.edu | ||
SIMSREE, Mumbai | N.A. | 0.67 | 2021 | 11.80 | 0.68 | www.simsree.org |
**For calculating the payback period, fee is reduced by a nine months proportionate salary, since the programme is of 12-month duration against 21 months for other colleges.
A few inferences from the above table are:-
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While considering the ROI of an MBA programme, it is also important to take into consideration its intangible returns.
Knowledge and learning of advanced business concepts, management tools and skill set acquired, presentation, communication, problem-solving, crisis management and leadership skills gathered, are some of the major assets that will hold a person in good stead towards a promising career.
An important non-financial benefit of a good MBA programme is greater self-confidence and self-worth in a student. Needless to add that this significant value addition to one’s personality acts as a catalyst to one’s career and earning potential.
An MBA degree from a prestigious MBA college not only provides the right skillset to become an entrepreneur, but is invaluable in today’s times of start-ups and venture funding because of the value it adds to the potential of the entrepreneur from the perspective of prospective investors.
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The alumni and peer network of an MBA college is a great platform for networking, which can lead to lifelong support, work-related understanding and professional relationships. Alumni and peer professionals from one’s MBA college can act as mentors, promoters, influencers or even motivators. Such networks go a long way in career growth and development. Connections shared by college professors might also be extremely helpful since they would’ve been cultivated by the latter over decades.
Placement resources of MBA colleges usually get students much better jobs and higher salaries as compared to what the latter might get on their own through other routes like job portals, etc.
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An MBA from a top MBA college prepares you for a role not only in India but anywhere in the world. The curriculum will include case studies from across the world. Foreign immersion/exchange programs offered by some of the reputed MBA schools are a good opportunity to study one semester in top universities in the world.
Choosing the right MBA programme, one that best suits your needs, can put you on an extremely fulfilling academic and professional journey. Hence, ensure that you evaluate your course options carefully in terms of ROI before you narrow down on one.
Pramod Nagpal is Chartered Accountant by training, (Retd.) Managing Director, Central Cottage Industries Corporation Of India Ltd. (A Govt. Of India undertaking, under Ministry Of Textiles). He holds close to four decades of experience in the areas of finance and commerce. Pramod has keen interest in the field of education, and guiding students on harnessing available opportunities to achieve their goals.
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