IIM Bangalore's Gaurav Agarwal just made history with the 'highest ever' salary for for an Indian b school graduate. His $193,000 (105,000 pound) job with Barclays in London featured prominently on every channel and in every newspaper. The funny thing, though, is this is not exactly 'breaking news'.
What Gaurav received was a Pre Placement Offer or PPO after a summer stint with the company. IIMB tried to keep it under wraps but the info leaked out long ago. Way back in October 2005 this is what I wrote about it in Businessworld's B school special issue
Placement is months away, but some lucky rats have already crossed the finish line. Ten international PPOs (pre-placement offers) have been bagged by students at IIM Bangalore. The average salary: over $100,000 p.a.
But the toast of the town right now is Gaurav Agarwal, a second-year student who has got the 'highest-ever offer' of £105,000 p.a. That's $193,000, or Rs 84 lakh, and beats the previous year's IIM headline salary of $152,000 (IIM-A's Ravi Singhvi, HSBC London) by a comfortable margin.
The stuff I wrote last year about
a) These guys not being fresh faced 22 year olds
b) Issues like Purchasing Power Parity, Cost to Company etc
All still holds true. So I'm not going to repeat it.
What I find interesting is that while soaring salaries make people go ooh and aah every March, the real action is now happening not at final placement but summer placement itself. Which takes place barely 3-4 months after you join campus.
The practice has always existed - HLL, P & G, Citi used to be the sought after PPOs. But with investment banks coming in and recruiting for summers abroad, the stakes just went that much higher. As one IIM A student puts it:
As far as the students are concerned, a summer internship in an i-bank means bypassing one and half years of hard-core, maddening competition to secure an i-banking career abroad. It's a short cut.
This is standard operating procedure. At Wharton, summer internships are jokingly called 'ten week interviews'.
All's fair in love and...
There are, however, murmurs about the selection process...
When the final placements happen, companies have an important number to base their selections on - the CGPA. But when the recruitments for summers happen, the number's not known yet, or the time period is too short for someone to be judged purely by the CGPA. In such a situation, various factors play a role in deciding a candidate's suitability for the job, one of which is the student's past profile.
Another student says,"Sex, past academic performance, and past institute reputation is what I banks look at."
To put it bluntly, IITians and women are believed to have an unfair advantage when it comes to I banking summers in London and New York.
The simple mathematics of it is that if an I bank decided to pick up equal numbers of male and female trainees, the women have to face less 'competition' because there are far fewer of them in the batch to begin with.
The 'feeling' however is that girl are less deserving... The irony is that, at least in India, women have truly made a mark as I bankers! (think HSBC's Naina Lal Kidwai, J P Morgan's Vedika Bhandarkar, the ICICI women)
If you ask me, the entire process is anyways quite screwed. As one IIMB student describes it
Before being placed, I had to sit for GDs after GDs and interviews after interviews and companies passing rude comments "How is your work experience valid in our firm?" I was ushered in from one interview hall to another by volunteers enough to the extent that I sometimes had to strain myself to remember which company's interview i was sitting in.
In fact on one ocassion, a friend of mine forgot which company's interview he was in - he still managed to give those arbit globe answers and guess what! the company recruited him. I was god damn relieved to be out of the cruel process but atleast felt elated to have got a US placement.
A worldwide phenomenon
Incidentally, I have reviewed a book called the 'Running of the Bulls: inside the cutthroat race from Wharton to Wall Street' in the latest issue of Businessworld
The book focuses on students of the undergrad business program, which is extremely competitive. But change the names, locations and a few other specifics the attitude and mindset is the same - on both sides of the Atlantic.
"The idea of investment banking, not necessarily what investment banking is, but rather the idea of it, was sexy. It created delusions of grandeur of being a multi-millionaire in your twenties in even the most mild-mannered of students."
Chapters with titles like ‘Goldman or bust’ and ‘Battle of the Bulge Brackets’ would surely find resonance on IIM campuses. And the bit about 20 year olds magically discovering a 'passion' for finance soon after joining Wharton. There are also amusing details of students trying hard to impress the i-banker VPs who descend on their campus for Pre Placement Talks or PPTs.
Of course in India I haven't yet heard of information or woo-the-student sessions held at fancy restaurants over wine and cheese. But I'm told pizzas are now a standard fixture post-PPT and ensure a decent attendance.
The Wharton undergrads join as analysts at $45-55,000 salaries. After a few years they go back for MBAs and many rejoin the i-banks as associates at $100,000-120,000 salaries (the profile now also being offered to IIM grads).
Not all associates manage to claw their way up the ranks to the million dollar bonus positions. Many burn out, given the 80-100 hour work weeks.
But it works for many, and for the rest - there are always exit options. Right now, things have never been better for those angling for an i-bank/ overseas posting.
27% of IIM A's first year batch of 249 has been placed abroad while at IIM Bangalore the number of international offers is 41, twice the number last year.
Here's a fun read for that long haul flight.
Footnote: Shortly after I wrote this I was invited by NDTV to be on their 'India 60' show focussing on IIM salaries. Framing the question as 'Are IIM graduates worth their weight in gold' was a bit sensationalist I thought. But hey, I guess that's what TV is all about...
Have now had the unque experience of being on television 3 times in one week. The MTV CNBC Budget Fundas show was the most fun, besides the folks there were kind enough to make me look more presentable by doing my make up :)
Secondly, being physically present with the host/ anchor makes things a lot easier. The joys of speaking into a camera with a earpiece connected to New Delhi are highly overrated!
Anyhow, thanks to all this I have finally gotten over 'idiot box fright'. But any more appearances and I'll be competing with Mahesh Bhatt... ! Frightening thought.