Lessons and pointers from ISB (Indian School of Business), the only “world-class” educational institution in India
September 6th, 2009
Indian School of Business (ISB), Hyderabad is ranked 15 in 2009 in Global MBA rankings by Financial Times, UK. It had a ranking of 20 in 2008. At 15 it is ranked higher than business schools at Cambridge, Yale, Oxford, Northwestern, Duke, Michigan, Berkeley, etc. In contrast none of the IIMs appear in the top 100.
While comparing IIMs to ISB, following are two aspects that stand out.
1. The faculty salary: Following is an excerpt from a report in Times of India that compares the salary of assistant professors at ISB with that of assistant professors at IIM and Harvard.
The memorandum says an assistant professor (AP) at Harvard gets $140,000 as annual starting pay, equivalent to Rs 23 lakh and Indian School of Business (ISB) pays over Rs 20 lakh to its APs. Against this, an IIM-A AP gets only Rs 5.5 lakh as starting pay annually.
$140,000 at Rs 48.9 per USD is Rs 68.5 lakh. So the mention above that it is equivalent to Rs 23 lakh must be based on purchasing power parity. Lets verify that.
As per this page the nominal GDP of India in 2008 is $1,209.686 Billion and as per this page the PPP GDP of India in 2008 is $3,288.345 Billion. So while 1 USD = Rs 48.9 nominally, using PPP 1 USD has the purchsing power of 48.9/2.71834592 = 17.99. Thus $140K has the purchasing power of 140K*17.99 = 25.18 lakhs.
So ISB’s salary for assistant professors at Rs 20 lakhs/year is about 80% of the salary paid to assistant professors at Harvard taking PPP conversion rate into account.
2. The governance: The following excerpt from Ila Patnaik’s article articulates the impact of governance on ISB’s ranking.
There is only one university in India which has autonomy on budget setting, recruits its own students, has flexible HR policies, etc., and this is the Indian School of Business. It is perhaps logical that, in 2008, ISB was ranked the 20th best MBA programme by The Financial Times, and in 2009 this rank was improved to 15. None of the IIMs feature anywhere. This is a striking contrast between enormous state expenditures on the IIMs failing to yield measurable results when compared with an alternative which has landed India in the top rankings of the world.
The Vedanta University bill allows it to have the governance structure that is mentioned in Ila Patnaik’s article.
In regards to being able to pay world class (purchasing power equivalent) salaries two aspects of Vedanta University will allow that: the initial donation of $1 Billion by Mr. Anil Agarwal (CNBC-TV18 recently interviewed him) and the resources that can be generated from the townships planned around the university.
The large number of students, eventually to reach 100000, will allow Vedanta University to offer some faculty (say Nobel laurates or would be Nobel laurates) more than (in nominal terms, not just PPP) their current salaries and thus lure them to Vedanta University.
Entry Filed under: Vedanta University, Puri
1 Writeup
1. Sanjib Karmee | September 6th, 2009 at 4:38 pm
Govt. should forget about expanding IITs and IIMs. Let them be specialized Institutes. The central govt should model the proposed National Universities like ISB. Increasing the salary of faculties and research scholars will have a huge impact on the out put of the Institutes. Otherwise these proposed national universities also will be like central universities.