Career insights by GGI is a new series by GGI sharing hacks and tips around management consulting, MBA, product management and public policy.
In this GGI career insight, we will be sharing insights into: the reality of Cost to Company (CTC) packages and in-hand salaries.
Have you ever heard that students from top institutions in this country are getting packages worth 1 crore? Or have you ever wondered why you are just earning 6-8 lakhs, but IIM/ISB/IIT students are earning 45-50 lakhs?
As a former BCG consultant and an advisor for the Tony Blair Institute, I can share the reality behind these packages. Taking into account my experiences, we will uncover the truth about the inflated CTC packages, their break up and the actual in-hand salary.
1. Culture of Inflated CTC
Let us begin by laying the foundation that these are not false CTC reports by organisations and MBA schools.
The companies do incur some costs beyond the in-hand salary that you get. This could be in the form of insurance, travel or other assets they provide to you. Thus, it is beneficial for the employer to inflate the CTC to attract higher quality talent towards them.
Similarly, it is beneficial for the B-schools to stay in tune with these high CTC packages to attract a better pool of students. For the same reason, individuals prefer to not share their actual in-hand salaries.
2 Components of CTC
2.1 Joining and Annual Bonus
At BCG, we were given an annual bonus based on our and the firm's performance. Similarly, you will get a joining bonus as well.
Back in 2019, after completing my MBA from ISB, I was given a CTC of 33 Lakhs. Out of this, 2 Lakhs was just by joining bonus.
2.2 ESOPs and Allowances
ESOPs are particularly prevalent in start-ups. Though, it will diminish the in-hand salary that you will get from the firm. ESOPs get encashed when you stay with the company for a long period of time.
It is basically a retention strategy followed by the employer so that you stay with the firm for a longer period of time.
2.3 Taxation
If you are employed at leading firms such as Amazon, BCG or McKinsey, you will fall into the 30% bracket in India. This too will diminish your in-hand salary.
However, due to the lack of taxes in Dubai, I saved a lot of my in-hand salary.
3. In-hand Salary of CTC
I shall begin by quoting some statistics here. If you join any organisation, 20-40% of your CTC will get eaten up by the 3 components we discussed above.
Now for the anecdote, when I joined BCG in 2019, I was given 1.5 Lakhs per month or 18 Lakhs per annum. This, of course, does not include my joining and annual bonus.
If you need more help getting into management consulting and product management, feel free to check out my education venture- Global Governance Initiative. In our impact MBA scholars program, the highest CTC has been 29 Lakhs and the average hovers around 17 Lakhs per annum.
Author: Shatakshi Sharma, Co-CEO Global Governance Initiative, Ex-BCG Management Consultant, Former Policy Advisor, Tony Blair Institute for Global Change
If you are interested in learning about GGI's MBA Scholar program, you can learn here.
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