Going abroad is expensive, but does the long term return justify it?
Although money isn’t everything, it surely is a major factor for your career choices. You could choose to do a MBA program for a number of reasons, but being able to progress in your career and pulling a heftier paycheck is certainly part of that decision.
Warren Buffett once said the single best investment you could ever make is in yourself. He himself went to Columbia and encouraged students to heavily invest in their skills and spend their 20’s learning before starting a career.
Before you start your journey to sign up for an entrance exam and apply to b-schools, you probably want to take a piece of paper and calculate what you get for the amount of time and money invested. Like with other things in life, completing the MBA doesn’t come without some sacrifice.
So, when you put the money down today, how will it pay you back in the future and is it really worth it? This paper will pit the tuition fees and living expenses against future expected earnings to see if the ROI is worth it.
Note that this analysis is purely based on financial aspects of studying this course abroad. The life experiences you are likely to get, the professional network you develop and the learning experience in a foreign land are all excellent reasons for joining a course abroad, but we can’t really break those experiences down into numbers, so this study will focus only on expenses and income.
Breaking down the return on any investment is a crucial skill for your MBA as well. Later in your career you may be expected to calculated the ROI for a stock, a new piece of machinery or some property your client wants to invest in, so this sort of exercise really helps.
Now, every business school is different and every MBA has unique circumstances, of course, but major publications like Forbes and the Economist do try to rank business schools according to ROI for alumni. Forbes does a survey once every 15 years and it’s most recent list in 2015 put Stanford on top. The Economist put HEC Paris on top because MBA alumni earned more after their course than before it.
All these surveys are conducted from different perspectives and tend to average out the pre-MBA and post-MBA earnings. So if you live and work in India, do a course abroad and get a job in another country where they pay better, your personal ROI could end up being quite different. So it is essential that you consider your own life goals and study objectives before calculating the returns.
To accurately measure the ROI of your course you need to pin down how much it costs you to study, how much of your salary will you be sacrificing to do the course and the cost of living in the country you choose. Then you need to decide if you are likely to look for jobs abroad or head back to India, and calculate the difference in salary.
What you are likely to observe
As mentioned before, the ROI of a course depends on your unique situation, but there are some logical conclusions you can make before you start.
Costs: You already know a foreign MBA is likely to cost you more than completing the course in India. Tuition fees are higher and the cost of living is potentially higher as well. But many countries allow you to work while you study and that would make a serious difference to how much the overall course costs you.
Pre and post salaries: Assuming you leave a job in India and pursue one abroad, you are guaranteed to have a great ROI. Indian wages are some of the lowest in the world and post-MBA wages are likely to be higher than median incomes of even the most developed countries. 37% of MBA grads who study and work in India start off with a 3 lac salary.
Finances: There are a ton of options if you want to finance your studies and can’t come up with the upfront payment. Foreign banks are likely to offer you a great deal with lower interest rates and you should see breakeven in just a few years if you stay back abroad and work there. However, coming back to India after completing MBA abroad will mean your ROI equation changes dramatically. Even at the best salaries you may struggle to pay back student loans, so your best option is to spend a few years working abroad.
Opportunity Costs: Going right into MBA after graduation is still an option for many, but a lot more people are opting to get some work experience first. The average MBA student has at least 3 to 5 years of work experience and wants to complete the course for that added boost up the career ladder.
But if you go for a full-time course abroad, you have to factor in the opportunity costs of missing out on work you already have. As we’ve mentioned before, Indian salaries are pathetic, so transitioning from a salary here to a starter package abroad will work out in your favor. But if you have a great career, with lots of options to excel and earn tremendously well right now, your opportunity costs are a lot higher and that will, no doubt, shift the equation.
All things considered you are likely to see returns on your investment in an international MBA relatively quickly. Don’t be put off by the initial expenses and keep the bigger picture in mind while making your decision. Whatever you choose, make sure to consider all the variables and pick the best fit. Good Luck!