Should a Full Time MBA be Part of your Game Plan?

This weeks article in ‘The Tribune’, helps you get clarity on whether you should jump on the MBA bandwagon. We predict CAT registrations to go up this year as studying is a time tested way to tide out a recession. But you need to be clear on the fundamental criteria so that you don’t end up regretting your decision at the end of 1 or 2 years as the case may be.

Please do share the article amongst your family and friends.

It’s September, and MBA application season deadlines are coming up. As an MBA myself from one of the “premier” institutes, it definitely set the direction for my career, besides giving me lifelong membership to an elite group of individuals who are shaping the narrative of not just corporates, but also in many cases of the communities they are a part of and in some cases our national agendas.

Having said this, it is 2020.  The arguments which stood well 20 years ago are not necessarily valid today.  Today young graduates have a much higher chance of getting a job, establishing their own ventures and also moving up the corporate ladder without an MBA. There are many more options for acquiring the MBA knowledge in smaller bite sized modules or in online formats with focused specializations. The trend has already changed in US, where applications for top B schools have been seeing a declining trend for the last few years.

Top 5 Factors to decide whether to opt for an MBA:

1. AGE: The mean age of most B Schools is between 27-29 globally for the top 50 B schools worldwide. In India, the mean age is lower for the CAT based schools which have a median work experience of 2 years that translates into a median age of 25 years. A GMAT entry school like ISB would have a higher median age.

What does this mean? If you are an older candidate nearing 30 or over 30, you need to think long and hard before joining a full time MBA programme. Chances are that the jobs which companies coming for placement will have may not suit your profile or you run the risk of downgrading your seniority. You may end up struggling to find the right role outside the regular campus placement process. If you are an engineer in IT, ITES or Finance, chances are you are better off without the full time MBA if you are above 30 unless you really want to switch careers. If it is only about acquiring managerial skills, there are excellent part time options available these days. If you are a fresher, then even if you get admission, you may not be able to grasp the management concepts and hence not derive optimum value from the course.

2. COST BENEFIT ANALYSIS: Don’t let your heart or the desire to follow the herd trap you into a foolhardy decision. I always recommend the good old paper pen or spreadsheet exercise to figure out the hard-financial cost benefit of opting for a program. There are 2 main costs that you need to consider.

Program Cost. You may be able to find a programme which starts around Rs 2-3 lakhs (usually programs offered by the older government Universities), but the average tuition fees of the program at the leading institutes are between Rs 20-25 lakhs for a 2 year course. This does not include accommodation, books, laptop etc. ISB tops the fees in India at Rs. 36 lakhs all inclusive for a 1 year program.

Opportunity Cost. Chances are you typically have a 2 year work experience. Your salary could be Rs. 5 lakhs p.a. Lets also assume you don’t have any real savings to fall back upon and your parents can’t sponsor your MBA, so you need a student loan. Your opportunity cost for a 2 year MBA is Rs. 10 -12 lakhs (assuming you would have got an increment).

Actual Cost = Program Cost + Opportunity Cost

This means that you are spending Rs. 30-35 lakhs in reality for a course from a premier insititute.

Benefit: The financial benefit really is the salary you would earn. While the institutes tom tom the fantastic Rs 1 crore salaries, those are dressed up $ numbers in most instances. The average salary from premium institutes is quoted as Rs 20-25 lakhs p.a., but this is also an inflated number as the dollar salaries are also included in it. The younger IIM’s have an average salary of INR 10-15 lakhs p.a. Remember to factor the cost of debt servicing into the expected salary. Usually the repayment period for student loans is 5-7 years after the course concludes.

What does this mean? If your current salary is much lower than the expected pay-off, it makes sense to invest in an MBA after considering the average salary and cost of debt servicing. However, if you are already earning between 50-75% or more of the expected salary post MBA, you need to consider other factors before investing in an MBA. Note: the founders for most of the successful startups (think Zomato, Oyo, Ola, Swiggy) don’t have an MBA degree.

3. BRAND VALUE & ALUMNI POWER: Never underestimate the power of the institute brand and alumni power. Many doors do open because of them. Of course, what you do with the opportunity is upto you. Just as there are many successful alumni, there are quite a lot for whom Peter Principle (promoted to level of incompetence) has kicked in or they just decide to shun the rat race and associated stress to chart their unique path. In India especially, brand power matters to large extent for the first job, so it makes sense to aim for the Tier 1 B Schools. If going for a new school, consider the credentials of the faculty and management.

4. CAREER PIVOTS/TRANSITIONS: If you are an engineer reading this and you are hitting a brick wall in moving out of core engineering roles, then an MBA is for you. Dominated by engineers in India, the premier MBA courses are now consciously trying to get students from diverse streams (25%-35%). If you want to make a shift into marketing, finance, consulting, human resources, operations then definitely an MBA is preferred. An MBA provides a well-rounded perspective on the legal, ethical, management perspectives of running a business and has served as a great launch pad to change careers for multitudes of professionals. The toolkit of skills you acquire from an MBA will definitely help you solve business problems faster than others.

5. LOCATION OF THE PROGRAM: In a country like ours, this is important as location does impact attracting good faculty and placements. Having said that, in the long run, the strength of the brand will overcome any locational disadvantage (example the newer IIM’s at Kashipur, Rohtak, Ranchi are doing very well). And with stronger connectivity, the disadvantage is nullified over time.

The 2 year full time MBA is well on it’s way to become a luxury product in USA. These headwinds are a trailer. Pundits may say that this is not the case in India, where the premium B School brands are in an expansion mode. I say, choose wisely how and when you want to acquire additional skills.

Nimrata Kapoor, HR Advisor and Career Coach (

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