Sounak Banerjee Associate Content Manager
Associate Content Manager
MBA is one of the most popular management degrees in the world because of its lucrative salary and promising career. According to a report by Times of India, the employability of MBA graduates is the highest in India at 54%.
But it does not provide the full picture. According to a report by ASSOCHAM report of 2016, only 7% of the MBA from the B-Schools in India (except for the top 20) get a straight job after completing the MBA Course. The general myth around the MBA course is that students land jobs with huge salaries after completion of the course. However, the ASSOCHAM report suggests that most MBA students earn between INR 8,000-INR 10,000 after spending INR 3-5 lacs on MBA Fees.
See: MBA Salary
Before taking admission in MBA, every student put some thoughts on the MBA college in terms of the returns it can offer. An Important step before taking admission to any MBA college is to check out what would be the ROI of pursuing an MBA program from that particular college. The ROI MBA full form stands for Return on investment. To determine the true value of an MBA you need to figure out how will you calculate its returns from the investment that you will make. The main objective of finding the ROI of an MBA course is to estimate the time period required to recoup your investment. One of the most common ways of calculating the ROI of an MBA course is by dividing the average placement offers of the college by the fees.
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Other factors such as the cost of attending classes, the yearly increase in salary, economic factors such as recessions (or a global pandemic), professional network, etc may affect the Return on Investment (ROI) of an MBA.
ROI measures a degree’s profitability and how you are better equipped with the knowledge that an MBA offers. ROI helps you to measure how and in what time you can pay back the hefty amount of fees that you took as a loan in order to become debt-free. It is seen that getting MBA admission to Tier one colleges offer a better ROI to the candidates than other colleges.
Check out the prospect of different MBA Specialization
FMS Delhi, IIT Bombay and TISS Mumbai are the top colleges that have the best ROI of an MBA in India.
B-Schools with Best ROI in India
Top B-Schools in India with the best ROI are mentioned below along with the MBA course fee, expected salary prospects, and the ROI:
| Institution | Salary (INR) | Fees (INR) | ROI (%) |
|---|---|---|---|
| IIM Ahmedabad | 25.83 | 23 | 112.3043 |
| IIM Bangalore | 24.54 | 23 | 106.6957 |
| IIM Calcutta | 28 | 20+ | 140 |
| FMS Delhi | 25.6 | 1.92 | 1333.333 |
| JBIMS Mumbai | 20.13 | 6 | 335.5 |
| SP Jain Mumbai | 26.36 | 19 | 138.7368 |
| XLRI Jamshedpur | 24.3 | 23.6 | 102.9661 |
| IIT Bombay | 20.8 | 8.7 | 239.0805 |
| IIM Lucknow | 24.25 | 14.16 | 171.2571 |
| IIM Indore | 22.92 | 16.1 | 142.3602 |
| IIFT Delhi | 20.48 | 16.7 | 122.6347 |
| MDI Gurgaon | 22.05 | 21.34 | 103.3271 |
| TISS Mumbai | 20.06 | 1.92 | 1044.792 |
| NITIE Mumbai | 21.5 | 12.53 | 171.5882 |
| IIT Delhi | 22.29 | 9.6 | 232.1875 |
| IIM Kozhikode | 23.08 | 19 | 121.4737 |
| SIBM Pune | 20.27 | 18.8 | 107.8191 |
| New IIMs | 14 | 12 | 116.6667 |
| Sydenham Mumbai | 10.97 | 1.34 | 818.6567 |
| IIT Kharagpur | 18.1 | 10.52 | 172.0532 |
| UBS Chandigarh | 11.78 | 0.35 | 3365.714 |
| NITs all Campuses | 5.6 | 0.72 | 777.7778 |
| PUMBA Pune | 6.43 | 1.4 | 459.2857 |
| IFIM Bengaluru | 9.15 | 9.15 | 100 |
How to calculate ROI of an MBA?
Calculating ROI can be a tedious task but it can be easy if you have all the metrics with you like the fees of the college, the interest a bank is offering, and the average salary the college has been offering in past years. Different MBA ROI calculators can be used after considering the different parameters. Below are a few steps that can help you for calculating the ROI of an MBA college for different types of MBA Candidates
For Experienced Candidates
The following steps can be used as an MBA ROI calculator for candidates with work experience.
Step 1: Have your current salary value with you
Step 2: Have the fees and duration of the MBA program that you chose
Step 3: Subtract your salary before enrolling in an MBA and your expected salary after the completion of the program.
Step 4: Divide the total cost of attending the B-School by the salary difference that you got in. The integer obtained is the number of years it might take to recoup the investment that you made.
Example
If your Salary is INR 5,00,000 before Enrolling in MBA and the college at present offers INR 10,00,000 as an average salary and the fees of the college is 18,00,000 while the past trends of the college show that the average salary increased approximately by INR 1,00,000. Therefore, the number of years it will take is INR 18,00,000/ (10,00,000-5,00,000) = 18,00,000/5,00,000= 3 years 6 months.
Also See: Executive MBA vs MBA for Executive
For Freshers
The following steps can be used as an MBA ROI calculator for candidates with no prior work experience
Step 1: If you have narrowed down to some college then consider its fees and its median or average package offering
Step 2: Assume the increase in average salary for the next two years by seeing the past salary trends of that B-School.
Step 3: Apply the rate of interest that the bank offered you while applying for a loan
Step 4: Determine the number of years it will take for you to repay the loan.
Example
If your Salary is INR 5,00,000 before Enrolling in MBA and the college at present offers INR 10,00,000 as an average salary and the fees of the college is 18,00,000 and the rate of interest the bank offers is 10% and the past trends of the college show that the average salary increased approximately by INR 1,00,000 so you can expect it to be INR 12,00,000.
Therefore, the total amount you have to pay after completion of an MBA is INR 20,00,000. Now if your salary after 2 years is INR 12,00,000 then your Monthly salary is INR 1,00,000 and of which if you pay INR 50,000 to the bank the number of years it will take is 3 and half years to pay the full fees.
Confused about what to do after graduation? Check out Why MBA
Calculating ROI of an MBA: Factors to Consider
Consider the financial advantages an MBA can offer
Look for how much salary you expect after an MBA, and how this salary will impact your ROI, whether the salary is higher than the fee you paid to pursue MBA and how much time will it take you to cover the amount you have paid to pursue MBA while earning.
Factor the networking gains into MBA ROI
MBA is mostly about networking. While doing an MBA or after completion of an MBA you might see yourself having a good network of people in your arena. But a good B-School will help you to get the best networking and with prominent names. This networking can help you to climb the professional ladder or might help you in some management way.
Include Personal priorities while calculating the ROI
Questions like 'why you want to do an MBA? What career advancement you expect from MBA? Is the chosen B-School the rightly chosen by you in terms of career advancement?' will help you to determine the right B-School and then the correct ROI.
What is ROI in MBA: FAQs
Ques. What does the ROI mean?
Ans. ROI an acronym for Return on Investment is the number of years it will take to repay the full fees that you might have taken as a loan to pay the college fees.
Ques. How do I calculate ROI if I am an experienced candidate?
Ans. Step 1: Have your current salary value with you
Step 2: Have the fees and duration of the MBA program that you chose
Step 3: Subtract your salary before enrolling in an MBA and your expected salary after the completion of the program.
Step 4: Divide the total cost of attending the B-School by the salary difference that you got in step 3. The integer obtained is the number of years it might take to recoup the investment that you made.
Example: - If your Salary is INR 5,00,000 before Enrolling in MBA and the college at present offers INR 10,00,000 as an average salary and the fees of the college is 18,00,000 while the past trends of the college show that the average salary increased approximately by INR 1,00,000. Therefore, the number of years it will take is INR 18,00,000/ (10,00,000-5,00,000) = 18,00,000/5,00,000= 3 years 6 months.
Ques. Is ROI that much of Importance?
Ans. ROI is always the main point of focus by a student who is willing to take admission in B-School as the fees of top B-School is going exceptionally high. ROI will you to determine the number of years it will take for you to repay the loan that you took from a bank for paying the fees of the college. So, it makes sense to know the ROI of a college.
Ques. What factors should I keep in mind while choosing a good B-School?
Ans. The average placement the colleges have offered in past years, fees of the college, establishment year of the college, Batch strength of the college are some of the key factors to look in for while taking the admission in a good B-School.
Ques. What factors to take into account while considering ROI?
Ans. Fees of the college, Average package a college offers, Roles the companies offer to students of that college, your expectations from MBA, how you see yourself in the next 10 years are some of the things you should take into account while considering the ROI.
Ques. How can I pay for an MBA?
Ans. Some colleges have hefty fees while some have not so hefty fees which can be easily paid off. For colleges having hefty fees, one can opt for loans provided by the banks. Every bank has different criteria to offer the loan and has a different rate of interest and duration. considering all points one can choose the bank that meets one's criteria.
Ques. How ROI can be helpful in college selection?
Ans. ROI helps to determine the cost factor and the duration it might take to repay the whole cost that was incurred for taking the course.
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