A parents guide to understanding their kids salaries: As you read front-page news articles of IITians being offered salaries of 1.5 crores, you are probably thinking of the same things as many other parents. How does one get such offers? Will your son / daughter get one? Heres a basic primer. > For entry roles in most companies via the colleges placement cells, salaries are more or less fixed beforehand after negotiation with the placement cell. > These salaries offered to new hires depend almost entirely on the industry and/or job profile, and differences in salaries are not so much due to the students talent but more because of their career choice. Bear this in mind when you compare salaries with other parents. For instance, top-tier consulting firms in Indian typically offer salaries around the 15 lakh per year mark, whereas the same students would have earned more than twice as much if they were working in Quantitative Analysis roles. Also, different companies look for different kinds of individuals, so being selected by one particular kind of company is not an indicator of overall aptitude. Example: If Rajus mother brings sweets to your house telling you he has been offered 30 lakhs, and is trying to make you feel inferior because your son Sanju was offered only 15 lakh for his consulting job, you can one-up her by telling her that in all likelihood, Raju wasnt even shortlisted by consulting firms. > Apart from Computer Science (CS), most jobs that use core engineering skills are relatively lower paying compared to jobs such as consulting or banking. If someone from Mechanical Engg is interested in working in the field they studied at IIT, it is possible that they will get only a 10 lakh salary. Again, this depends on the choice of career and not necessarily on the aptitude of the student. > In CS companies especially in the US, it is common to offer a signing / joining bonus (usually around $10000, but can be more) and some form of equity (ownership in the company in the form of stocks or something similar). The signing bonus is a one time payment and mostly goes towards covering the costs of relocation. On the other hand, the stock is given over a period of 4 to 5 years, starting a year after joining, which means that the employee starts getting parts of their stock one year after joining, and ends up getting the whole thing at the end of the vesting period if they stay in the company. In effect, the only recurring part of the offer is the base salary, which is typically around $105000 per year for new grads these days. > Newspapers have the habit of reporting massive salary figures in the order of crores. First, they add everything possible number from the offer letter, including the signing bonuses and the monetary value of the stocks. Second, they just multiply the final figure by 60 and come up with some utterly meaningless number and report it as an annual salary, which is just plain false. It would be helpful to know that the rent one person typically pays in Bay Area is around 75000 rupees a month, for instance, and a trip to a basic restaurant would cost 600-1000 rupees per head. It is indeed true that despite taking into consideration the higher cost of living in the US and the USD-INR conversion rate, salaries in the US will let you afford a higher overall standard of living than in India, but the difference is not as large as the 1.4 crore figure would convey. By virtue of being from a highly reputed college, your kid has a fair amount of job security. Theyd be able to live comfortably well off no matter what they do. The placement season is a very stressful time for most students. Please dont make it worse for them by burdening them with unreasonable expectations. (I had thought of also addressing this to newspapers, but I am sure they already know this and are being willfully ignorant, so why bother)
Posted on: Wed, 03 Dec 2014 15:57:31 +0000