Positive, yet Cautious Hiring Activity in Campuses this year: Study

Uncertainty in the job market has been a norm in the past few years. This constant state of flux that India Inc. has been operating in has given rise to unpredictability, ambiguity and volatility in several industries as far as hiring is concerned. One sure-shot indicator of healthy hiring is the placement activity in college campuses. The Aon Campus Study 2016-17 analyzes just that and collates data from 300 organizations across 7 industries “to understand their campus strategies for identified educational qualifications across different tiers for 2016-17.”

The study aims to understand the compensation philosophy by companies across campuses, and provides a nuanced understanding of campus compensation and recruitment strategies. The pan India study covered the industries of Hi-Tech, ITeS, E-Commerce, Consumer Products, Hospitality, Services, Financial Institutions, Manufacturing and Life Sciences and was conducted between October 2016 and January 2017. The study looks at campus hiring activities through the lens of educational qualification, compensation, attrition, and type of college, bonus, internships etc. 

The findings of the study suggest that “organizations are adopting a positive yet cautious outlook to their campus strategy.” 84 percent of the organizations that participated in the study have stated that the number of campus hires is expected to increase this year, or at least be retained at previous year levels. The remaining 16 percent have reported a decline in the intake of campus hires this year. While Tier 1 MBA institutes have seen a dip of 2 percent in the overall number of campus hires, the number has neither increased nor decreased for B.Tech students. However, the compensation offered at these colleges has remained steady “with Tier 1 institutes continuing to enjoy a pay differential of 1.8 & 2.9 for MBA and 1.5 & 2.4 for B.Tech, when compared to Tier 2 & Tier 3 institutes respectively.”

The positivity can be gauged from the fact that 29 percent of the organizations are expecting to increase campus compensation this year. Furthermore, “57 percent of organizations capture early attrition across all campus hires, out of which 52 percent of the organizations define early attrition to be Less than 1 Year.” The highest attrition was observed to be that of Graduates at 18.4 percent, followed by MBA at 18.2 percent. Both these figures are relatively higher than the Pan-India attrition of 16.3 percent.

The campus hiring activity for 2016-17 has definitely not dimmed since 2015. While MBA campuses from Tier 1 & Tier 2 institutes saw a dip of 2-3 percent, a rise has been registered in Tier 3 colleges. Nonetheless, 89 percent of the surveyed organizations visit the Top 14 Tier 1 MBA colleges, and Sales & Marketing and Finance have been identified as the preferred functions. E-commerce emerged as the top-paying industry for Tier 1 MBA hires, offering 10 percent and 16 percent higher Total Fixed Compensation (TFC) and Total Cost to Company (TCC), respectively, as compared to Pan-India. The former top-paying industry, Consumer Products, offers 7 percent and 9 percent higher TFC and TCC, respectively, as compared to the Pan-India level. 

Hiring from B.Tech campuses from Tier 1 institutes has retained its 2015 level, while that among Tier 2 campuses has gone up and Tier 3 campuses has declined. E-Commerce emerged the top-paying industry for Tier 1 B.Tech graduates as well, offering 33 percent and 45 percent more TFC and TCC, respectively, than Pan-India. Similarly, Consumer Products is offering 32 percent and 40 percent more. 93 percent of the total M.Tech hiring takes place from Tier 1 and Tier 2 colleges. “63 percent of organizations capture early attrition for B.Tech/M.Tech campus hires, out of which 50 percent of the organizations define early attrition to be Less than 1 Year.” The overall attrition for M.Tech hires in 2016 is 8 percent, nearly half the Pan-India 2015 Attrition of 16.3 percent, while that of B.Tech hires is 15 percent (2016). 

“Organizations are willing to pay Overall Tier 1 campus hires 2.9 times that of Tier 3 and 1.8 times that of Tier 2 campus hires; while Tier 2 campus hires enjoy a pay differential of 1.5 times when compared to Tier 3 campus hires.” This differentiation is in tune with the trends witnessed in 2015. While the projected TCC for IIMs is Rs. 21,50,000 for 2017 (up from Rs. 20,00,000 in 2016), the same is Rs. 6,63,000 for Tier 3 colleges (up from Rs. 6,21,000). A similar trend is observed in TFC as well. 

B.Tech graduates see this difference narrowing marginally, as companies are willing to pay Tier 1 campus hires 2.4 times that of Tier 3 and 1.5 times that of Tier 2 campus hires, much like in 2015. While the IITs witnessed the TCC to be at Rs. 13,50,000 in 2017 (up from Rs. 12,50,000 in 2016), Tier 2 colleges saw the same to be at Rs. 6,94,000 (up from Rs. 6,50,000) and Tier 3 colleges were at Rs. 4,62,000 (up from Rs. 4,25,000). “The overall TCC median for Tier 1 is expected to increase by 8.0 percent in 2017, whereas the TFC median is expected to increase by 7.5 percent... The average year-on-year increase for Overall Tier 1 compensation, over the last 6 years, has been 8.7 percent while the increase for Tier 2 & Tier 3 colleges has been 9.9 percent & 7.8 percent respectively.” For M.Tech hires, the overall TCC median for Tier 1 is expected to increase by 9.8 percent in 2017, whereas the TFC median is expected to increase by 8.4 percent.

56 percent of the organizations reportedly hired management graduates with prior experience. “These professionals are hired as laterals and are paid higher than other management graduates with zero/ less than one year of relevant work experience.” This additional compensation that comes with experience is in the range of Rs. 87,500 to Rs. 1,00,000 in 2016 for each relevant year of experience. For 2017, the same is projected to be Rs. 90,000 for 2-4 years of experience. 90 percent of the organizations reported that they offer internship programs at MBA campuses, and the median monthly stipend at Tier 1 campuses is Rs. 67,500 (2.7 times higher than that of Tier 2 campuses).

For B.Tech graduates, 65 percent of the organizations reported to offer internship programs, and the median monthly stipend at Tier 1 campuses is Rs. 25,000, which is 1.2 times that at Tier 2 colleges. Similarly, 71 percent of the organizations said that they offer internship programs at M.Tech campuses, and the media monthly stipend for Tier 1 colleges is Rs. 30,000, which is 1.25 times higher than what is offered at Tier 2 colleges. In addition to stipend, organizations also provide transport and accommodation in guest house to interns. Meritorious CA and CFA campus hires also saw a significant rise in their TFC and TCC, depending on their performance. A similar pattern was noticed in the TFC and TCC of graduates, with the differential interplay of Tiers as well. 

Organizations are also starting to revolutionize their campus offerings by using campus graduate preferences as the pivot point while devising their campus strategies. The “one size fits all” approach is slowly starting to fade away and organizations are beginning to realize that they will need to target the specific needs of the hiring demographic in order to offer a more holistic and valuable campus package and thereby position itself as the preferred choice for campus graduates.