ROI for a full time MBA program for working professionals

What is the ROI from the MBA program I am planning? Now this a taboo question to ask since there is the illusion of ‘big bucks’ at the end of the rainbow and who questions the brand value of an IIM and ISB anyways. ‘How dare you?’ is the tone I get when I ask this question. Let’s do the math anyways for those of us that value the money we spend.

Let’s take an average IIM/ISB aspirant who is an engineer with 3-5 years of experience

IIMs 2yrs MBA

Fees 14,00,000

Living cost (assume Rs. 20,000 per month) 4,80,000

Lost salary (assume 8 lakhs per year) 16,00,000

Total cost ~ 35 lakhs

ISB 1yr MBA

Fees 24,00,000

Living cost (assume Rs. 20,000 per month ) 2,40,000

Lost salary (assume 8 lakhs per year) 8,00,000

Total cost ~35 lakhs

Overseas 1yr MBA

Fees 60,00,000

Living cost (assume 2000 USD per month) 14,40,000

Lost salary (assume 8 lakhs per year) 8,00,000

Total cost ~73 lakhs

There are several other costs that I am not even counting; money spent in CAT, GMAT, Coaching, Applications, emotional pressure of staying away from a spouse/gf/bf (or time for those wanting to find one!), uncertainty in base location post MBA, huge expectation pressure from friends and family and on and on…

Glamor and prestige aside your career must pay back these sums over the next 5-10 year period. I have not even taken into account the time value of money (a concept you will learn during your MBA). The average post MBA 18 lakh salaries are a myth and are skewed heavily by a few overseas jobs that pay in a different currency. The true average is more like 10-12 lakhs; and as with any average, quite a few students end up with salaries that are below this average. You do the math now…

Also the pressure to meet the ROI prompts very odd actions during the placement season. Somehow jobs that show a high salary tend to become more desirable to meet this ROI goal. I had friends that spent the first 5-6 years of their career in trading jobs in Africa, The Caribbean in pursuit of higher salaries alone. These years were lost years as they don’t add as much value to more stable long term paths if you want your career built in India.

If making a great career is your goal, and learning is a means to pursue this, how else can you think about getting high quality MBA under much less ROI pressure?

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