Pay gap shrinks: Will BTech grads stay MBA course?

New Delhi: Starting salaries of MBA and BTech graduates in India have narrowed sharply over the years, according to the findings of a Deloitte survey. This could potentially lessen the lure of opting for costly management courses after completing BTech. The pay gap between MBA and BTech graduate salaries has nearly halved to 57% in 2024 from 102% in 2021, according to Deloitte's Campus Workforce Trends 2024 study shared exclusively with ET.

"This is without accounting for the investment of time and money," said Neelesh Gupta, partner at Deloitte.
The median annual pay for a BTech graduate from India's top 10 colleges was ₹15.8 lakh in 2022. Had the graduate chosen to continue employment, in 2024, the pay could have risen to ₹19-21 lakh respectively for an average vs high performer, said Gupta. While an MBA course typically costs ₹14-24 lakh, the average salary of an MBA graduate is Rs 20-24 lakh per year, showed the study. Experts say the shrinking pay gap between MBA and BTech graduates is mainly due to strong demand for high-tech talent among IT product firms, consulting industry, besides sustained demand for talent in new technologies.

Even after spending several lakhs of rupees for an MBA course, the pay package is nearly that of a BTech graduate. This is in addition to the fact that most students in an MBA class tend to be engineers (BTech grads).

According to Gupta, the narrowing pay differential can potentially lead to lower attractiveness for young talent to seek business management after completing BTech from a top college in the future.



Measures to Retain Tech Talent
This is considering the high investment in time and money involved in an MBA course.

"In certain industries, this (convergence of pay) is an emerging trend like IT product companies and the consulting industry who offer a premium to selected BTech students," said Shweta Srivastava, chief human resources officer at Azure Power.

She, however, added that salaries are not converging for the renewable energy industry yet.

Salary convergence between BTech and MBA graduates is primarily due to scarcity of talent with specific expertise, said experts.

"Expertise related to Big Data analytics, cyber security, healthcare, etc., have been scarce and as a result, salaries have grown exponentially," said Srivastava.

Pay convergence depends on the specific sector, said Praveen Purohit, deputy group CHRO, Vedanta.

"For example, in IT, we have seen better pay convergence compared to the manufacturing industry," said Purohit. "In our kind of industry (natural resources company), some specific core disciplines like BTech Mining, we are seeing the gap is bridging gradually due to its core tech value addition," he said.

Demand for tech and engineering talent is growing at a faster pace than management talent, pushing tech talent salaries higher, according to Deloitte.

"Also, the rate of reskilling is faster in engineering and technology vs MBA," said Gupta. Core manufacturing and IT products are driving up BTech salaries.

To retain technical campus talent, companies are creating several measures. These include innovative retention practices like skill-based pay, foreign immersions, academic immersions (in technical fields) and fast track career plans, according to Deloitte.