By IPS Correspondents
NEW DELHI, May 9 2006 (IPS)

Talent hunters from the big global names in business and finance, who regularly scout India’s top business schools, are suddenly finding themselves competing with local companies, ready to match the top dollar salaries.

On Mar. 13, Gaurav Agarwal, a student at the Indian Institute of Management (IIM) at Bangalore, found himself surrounded by television cameras after it was announced that the British investment banker, Barclays Capital, had offered him an annual salary of 193,000 US dollars. It was a record of sorts but one which lasted barely three weeks.

The Hyderabad-based Indian School of Business (ISB) stated on Apr. 5 that one of its graduates had been offered a salary of 223,800 dollars by an Indian firm. Three other students from the same institution had received job offers each exceeding 200,000 dollars. Spokesman at the ISB refused to disclose the names of either the students or their potential employers to maintain confidentiality.

“What was especially surprising was the fact that the highest salary in US dollars was offered by an Indian technology company with international operations,” Ajit Rangnekar, deputy dean of the ISB, told IPS. “It is significant that Indian companies are today willing to pay global salaries to talented young graduates so as to be able to compete effectively in the world market – that’s the big message,” Rangnekar said.

For decades, the government bemoaned the loss of the cream of the country’s management and engineering talent, that graduate from fine state-run institutions funded with public money, to Western industry, thanks to a lack of suitable opportunities and the less-than-congenial working conditions at home.

This has been especially true of the seven Indian Institutes of Technology (IIT) set up by the government with the idea of providing the brains for the country’s industry which, however, stagnated under the protectionism and high taxes of a socialist economy, forcing the flight of talent.

Obtaining suitable employment has never posed problems for students studying in India’s best B-schools, including the six IIMs that were set up by the Indian government alongside the IITs from the early-1960s onwards. The high salaries currently being offered reflect the confidence global corporations repose in not just Indian managers but also in the quality of teaching and training imparted in the country’s state-run institutions.

Responsible for this has been India’s gradual transition from a controlled socialist-style economy through a process of liberalisation begun in the early 1990s that not only provided new job opportunities in manufacturing and technology but also enhanced the reputations of the IITs and the IIMs, besides a handful of privately-run institutions.

This year, the outgoing students of the IIM-Bangalore have attracted the attention of the biggies in global investment banking such as Goldman Sachs, BNP Paribas, Merrill Lynch, Lehman Brothers, Deutsche Bank, ABN AMRO, UBS and J P Morgan besides Barclays Capital.

Consulting majors in the fray include companies like McKinsey, Bain & Co., Boston Consulting Group, Ameriprise Financials, Deutsche Post, A.T. Kearney and Diamond Cluster.

Manan Ahuja, 26, from the IIM at Ahmedabad told the Christian Science Monitor (Apr. 21) that the 185,000 dollars-a-year salary package offered him by Barclays was much more than what his father – a government bureaucrat in Delhi, India’s capital – had earned in his entire life.

During five days of recruitment at IIM -Ahmedabad last month, more than two jobs were offered to each of the institute’s 235 students, with salaries hiked as high as 100 percent over the last year. Analysts say Indians with MBA (Masters in Business Administration) degrees are receiving offers of compensation packages that compare favourably with those offered to graduates of Harvard Business School and Stanford University.

Bakul Dholakia, director, IIM Ahmedabad, said that multinational corporations are now looking beyond Harvard and Wharton towards India “for the world’s brightest business graduates”. He added that one cannot sell a product merely by its brand image. Pointing out that 80 percent of the 110 companies that visited his institution this year had come more than once, Dholakia said: “No company will visit us repeatedly if we are not intrinsically good.”

The IIMs are known for raising the bar very high before admitting students. For instance, in 2005, for roughly 1,300 seats in the IIMs, there were as many as 158,000 applicants who had appeared for a common aptitude test. In other words, less than one out of a hundred individuals who aspire to enter an IIM actually makes it.

While the IIMs were set up with government assistance and in collaboration with U.S. educational institutions like Harvard Business School, until recently, most of the students at these institutes were Indian citizens. Over the last few years, however, these institutes have been attracting large numbers of foreign students because of their relatively low tuition fees and living expenses.

A survey by the Business Week magazine found that a two-year course at a top-notch B-school in India would cost roughly 7,500 dollars for an Indian student and 22,000 dollars for a foreign student, against an amount not less than 138,000 dollars to complete an MBA programme at Harvard. Even the ISB at Hyderabad, said to be among the most expensive B-schools in India, charges its students around 29,000 dollars.

But the price is said to be more than worth it. The fact that IIM-Bangalore has been invited to open a campus in Singapore is one indicator of the demand for the teaching capabilities of India’s home-grown institutions.

The best Indian B-schools have imbibed much of the case-study oriented approach of international management institutions and encourage their students to become adept at multi-tasking, translating theory into practice and soaking in cross-cultural experiences. These qualities make them different from other management graduates, say IIM faculty members. >From a “brain drain” situation, that prevailed in India for many decades, the new mantra is “brain gain” befitting a country whose economy is growing at an impressive clip of 8 percent a year.

“The fact that IIM graduates get the best salaries is nothing new,” Prof. Sushil Khanna, at the IIM at Kolkata , told IPS in an interview. “This phenomenon is attracting attention because among the criteria being used to rank B-schools is the starting salaries of graduates.”

Khanna believes that privacy must be maintained when disclosing information about salary offers. “As an institute, we disclose only average salary figures,” he says, adding that it is not possible to stop individual students from “bragging about their offers”.

While stories of students getting high salaries attract media attention, Khanna says there are many IIM graduates who prefer to stay on in India earning modest salaries averaging 1,000 dollars a month. “For sections of the middle class here, it’s a great feeling to tell the world ‘we’re as good as anyone else’, but for some IIM graduates, India offers the most challenging and exciting opportunities, if not the highest salaries,” he added.

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