GMAT v/s CAT: Comparison

For a future business leader in India at the beginning of their career, there is one big choice to make: GMAT or CAT? Which standardised test is “better”? Here is a factual treatment of one of the biggest career-related competitions in the world today: How different is GMAT from CAT?

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Once you get your MBA from one of the world’s best Business Schools, your life will be all about Return on Investment (RoI). With that framework in mind, we use the same calculations to evaluate whether taking the GMAT or the CAT is the best option for you. Most of our metrics show that the GMAT wins v/s the CAT, but read on yourself, to make up your own mind!

  • Part 1: Return / Benefits
    Which test gives you a better chance of career success? Our view is that the GMAT wins out on this metric, due to the following reasons:

    1. The GMAT opens more doors than the CAT: The top 50 Business Schools worldwide accept only the GMAT, rather than the CAT. For a long time, arguments about access to B-Schools in India were simplified by saying that the CAT was mandatory for admissions to Indian MBA programs, but that is no longer true. In fact, one of the highest rated Indian MBA programs - at ISB - accepts only a GMAT or a GRE score. With a steady increase in the number of top Indian B-Schools allowing a GMAT test score for entry, it is clear that giving the GMAT gives you more options. With the GMAT, you win on both quality and quantity.

    2. In the short and long-term, the GMAT gives you a higher expected pay package: Every survey of MBA grads and potential MBA candidates tells us that the #1 reason to do an MBA is financial security. Every year, the highest pay package from an Indian B-School that only allows CAT for admission (for example, IIM-A) is in the region of Rs. 50 Lakh - Rs. 70 Lakh (for both domestic and international offers). If one contrasts the highest international offer for an IIM grad with the median salary (not even the highest salary) of a graduate of a top 25 US B-School, the median comes out to be Rs. 80 Lakh.
      Therefore, the short-term impact of giving the GMAT and going to a top global Business School is a minimum $20,000 hike in annual salary. The long-term impact is even higher - at the top executive level, bonuses are a large part of the take-home package. This is especially true for global companies, and the leadership of global companies is heavily sourced from graduates of the top global B-Schools. The GMAT is the ideal gateway to the biggest bucks.

    3. By a sheer number of test takers per MBA seat, the CAT is more competitive than the GMAT: In a competitive standardized test, you are judged by your absolute skills + your performance relative to others. About 250,000 people register for the CAT every year. The number of GMAT test takers ranges between 100,000 and 200,000 annually. The difference, though, is stark when you look at a number of seats that each applicant is fighting for: the number of world-class MBA seats open for application via the CAT is a few thousand at best, mostly in the IIMs. The top 5 Business Schools in the US alone (which only recognize the GMAT) accept more students every year than this. Therefore, the ratio of applicants to seats is heavily skewed in favour of the GMAT, and your expected chance of success (and hence your return on investment) is better in case of the GMAT, versus the CAT. Therefore, the pressure while taking the GMAT often feels lower than in the case of the CAT.

    4. Your GMAT score is valid for much longer than your CAT score: The period of validity of a GMAT score is 5 years from the date of the test. In practice, multiple test takers routinely submit GMAT scores that are 2 or 3 years old, without any measurable disadvantage as compared to a completely fresh score. The CAT score is valid for a few months, till the next year’s cycle of admissions to Indian Business Schools.
      Therefore, it is clear that giving the GMAT (as opposed to the CAT) lets you adopt a long-term approach towards career success, whereby you schedule the most important test in your life at a time convenient to you, and then tackle your other obligations and your applications months or years after test date. This flexibility is a clear part of what makes the GMAT a preferred option for hundreds of thousands of applicants worldwide.

    5. Improving your GMAT score is easier than improving your CAT percentile: You can retake the GMAT after 16 days of a previous attempt, and the range of dates available to you includes almost every day in the year. However, you can only attempt the CAT once a year. Once again, the GMAT offers greater flexibility in eliminating the randomness associated with a poor performance on a single day (even if your preparation was as good as it could possibly be). If you have a bad GMAT day, you can pick yourself up and get the score you deserve in less than three weeks; in the case of the CAT, you will have to sit out an entire admission cycle, thereby adversely affecting your career progression chances.
      Of course, you cannot take the GMAT more than eight times in your lifetime, but improving your score will need a maximum of two or three attempts. With careful preparation, your first attempt will give you your target score.

    6. The GMAT tests your ability to adapt: The GMAT is a completely adaptive test, which means that, based on the correctness of your responses, your subsequent questions adjust in difficulty. This means that the GMAT is a slightly better test of your innate sharpness and ability to process and analyze information (and to recover from small errors), whereas the CAT is more unforgiving of a single mistake.
      In addition, the quant syllabus for both the GMAT and CAT is approximately the same, but the CAT often has longer and more difficult questions. The GMAT being an adaptive test overall reduces the difficulty of the quant section slightly and therefore reduces the intensity of prep required, especially if you are a busy professional, or if you have other commitments.
      The Verbal section of the GMAT has a greater number of different formats than the Verbal section of the CAT, but the difficulty is approximately the same, given that all the additional GMAT exclusive Verbal question formats test for analytical skills as well, rather than pure vocabulary skills.

    7. Your GMAT score is available as soon as you take the test; in the case of the CAT, you will wait a couple of months: Expanding on the flexibility point earlier, one major advantage of the GMAT v/s the CAT is that, in the case of GMAT, you know immediately whether you have done well or not, and that you can plan accordingly, instead of having to guess. From a career perspective, this is a huge boon. The 50 days that you save by not having to wait for your result will help you improve your profile and application, and thereby indirectly increase your likelihood of getting into one of the best Business Schools in the world.

    8. After giving the GMAT, the admission process is based on variables within your control: Once you have a good GMAT score, your essays, your experience, and your recommendations will largely determine your chances of admission into a top B-School. These are all things that you can control, or that you have controlled through your career choices in the recent past. However, after you give the CAT, your admit offer depends on satisfying minimum criteria in many different fields, some ranging as far back as your tenth-grade marks. This process is a lot more random, and a lot less predictable, than the process of admission after you give your GMAT. Therefore, it is easier to maximize the probability of success if you give the GMAT.

    9. The Select Section Order feature in the GMAT offers you the flexibility to sequence the test your way: Since 2017, all GMAT candidates can select the order in which they attempt the quant / verbal / IR / AWA sections. This might seem like a small step, but it can be incredibly helpful on the day of the test. Through careful planning, GMAT candidates can start with the section that they are most likely to do well at, thereby providing a morale uptick for the rest of the sections, and potentially boosting them to a score that is 10-20 points higher than they would otherwise have achieved.
      The select section order feature is not currently available in the CAT.

  • Part 2: Investment
    Both the GMAT and the CAT involve an investment of time, money, and energy. Unlike in the case of the benefits (explored above), we prove below that the investment is essentially the same for both tests, with some minor differences. Here is a detailed breakdown of exactly how that happens:

    1. Monetary Investment: It costs $250 to take the GMAT once. In comparison, it costs Rs. 1800 to appear for the CAT, which is about 10% of the cost of a GMAT attempt

    2. Scale of monetary investment: From the facts above, it will be clear that the exam fees for the GMAT are approximately ten times those for the CAT. However, when you take into account that the median starting salary, in either case, is either in the tens of thousands of dollars annually, both $250 and Rs. 1800 pale into insignificance and do not need to be considered as significant costs.

    3. Program monetary investment: Choosing the GMAT also suggests that you will choose a program abroad, or a premium MBA program in India (for example, at ISB). In this case, the entire program fees might range from $150,000 to $200,000 abroad, while the programs in India, at the IIMs for example, would be in the range of $40,000. However, programs abroad routinely offer tuition fee waivers to the tune of $50,000 via scholarships, and the investment/loan reduces to $100,000 on average. Keeping in mind that the median salary abroad for a top MBA graduate is $130,000 and that the corresponding salary in India is $40,000, any difference in program spending can quickly be recouped in a few years after graduation. Hence, the program monetary investment differences can be ignored as well, while comparing the GMAT and the CAT.

    4. Time investment in preparation: In general, it takes a candidate longer to prepare for the CAT, given the greater competition for seats, and also given the slightly higher difficulty in the CAT quant section. In addition, the GMAT’s greater focus on analytical skills means that a large portion of those skills is already acquired by a given candidate. However, every person has a unique preparation plan - one that is prepared for him/her by his / her mentors, and that should be kept in mind.

  • From all the points above, it will be clear that the investment in either of the GMAT or the CAT is approximately the same when all other factors are taken into account.

  • Part 3: The Verdict - GMAT offers a greater Return on Investment than CAT
    Now that we have laid out, in detail, every factor that makes the benefits of taking the GMAT v/s the CAT clear, and also proven that the investment on either of the tests is essentially the same, we can come to the main argument: that the GMAT offers a much higher Return on Investment for a test taker than the CAT.
    The primary contributing factors to this include the worldwide applicability of the GMAT (including in India, the traditional bastion of the CAT), the more lucrative career options, and the greater flexibility in test taking and reporting.

  • Part 4: Summary of differences between the GMAT and the CAT
    In this section, we summarize everything we have discussed above, so that you have every point at your fingertips, as a ready reckoner.

    1. Short term salary prospects: The GMAT opens the door to institutes whose fresh graduates earn a median salary approximately 80% higher than those institutes which exclusively recognize the CAT.

    2. Long term career prospects: GMAT recognizing institutes offer easy access to senior global careers in every country of the world.

    3. Validity across the world, and in India: GMAT scores over CAT here; the top Business Schools worldwide only recognize the GMAT. Even in India, multiple top schools also allow GMAT scores now, and the number is growing.

    4. Competition from other test takers: The competition per seat is much fiercer in the CAT, which has slightly more test takers than the GMAT, vying for about 5-10% the number of top-tier seats.

    5. Difficulty of test: Almost equal. The GMAT’s quant section is slightly easier, while the CAT’s verbal section has fewer different formats.

    6. Length of validity of test score: GMAT scores are valid for up to 5 years. CAT scores are usually valid only for a few months, till the next annual cycle of admissions only.

    7. Flexibility in test taking: The GMAT can be retaken an unlimited number of times, with a 16 day gap. The CAT can only be taken once a year. In addition, the GMAT allows section order attempt flexibility and is adaptive in nature.

    8. Cost of application: The GMAT costs $250, while the CAT costs Rs. 1800, which is about 10% of the cost of taking the GMAT.

    9. Time spent in preparation: Overall, the GMAT takes slightly less time to prepare for than the CAT, though this is heavily down to the specific individual.

Overall: The GMAT offers a greater Return on Investment than the CAT

From the analysis above, it will be clear that you can prefer the GMAT over the CAT in most cases. Once you decide to give the GMAT, ensuring excellent performance, and a score of 700+, must be at the top of your mind, so that you can unlock the door to the top 50 Business Schools in the world. Head over to Jamboree today, and explore our different GMAT programs! We have something for every candidate.


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