The weakening rupee is not only weighing on investor sentiment, but also on B-school faculty salaries.
At the Indian School of Business (ISB), Hyderabad, the depreciation of rupee is making it difficult for the institute to offer attractive salary to faculty members it recruits internationally.
“We cannot pay the international faculty members the same as what they get in the US, so we benchmark our salaries at about 60 per cent of the salaries in the US. But now that the rupee has become cheaper, we cannot fully compensate for the same. This means we can’t reach 60 per cent of the US salaries. It has become more like 50 per cent of the US salaries,” said Sanjay Kallapur, senior associate dean for faculty and research, ISB.
Salaries at ISB are fixed in rupee terms and were benchmarked against the dollar when it was 40. The rupee on Tuesday slid to a fresh low of Rs 55.39 against the dollar, as foreign funds pulled out from emerging markets avoiding risky assets. It has declined by 11.51 per cent since February.
ISB has 46 permanent faculties and says it will continue to hire for a long time, as its programmes keep expanding. It opened its Mohali centre in Punjab this year.
ISB’s salaries are better than its industry peers, which is why the Indian Institutes of Management (IIMs) say they face a challenge from ISB when it comes to recruiting international faculty members.
“There have been instances in the past few months where the faculty we have tried to recruit has gone to ISB. ISB’s competitive salaries are a problem, but there is little we can do to address the same,” said dean faculty at one of the IIMs. However, IIMs do not benchmark their salaries against the dollar.
While an assistant professor at ISB draws Rs 4000,000 to 5000,000, his counterpart at IIM draws around Rs 800,000. This, however, would be over and above the consulting fee. While an associate professor and a professor at ISB would draw more than an assistant professor (ISB did not disclose the figures), an associate professor and a professor at IIM draw Rs 1020,000 and 1200,000, respectively.
ISB says it is not paying salaries at international levels although it wants international quality. IIMs say they have to adhere to the sixth pay commission salaries and thus their hands are tied when it comes to paying lucrative salaries.
While IIMs say they are slugging it out with ISB to recruiting international faculty, ISB says it is facing competition from Europe, Hong Kong, Singapore and Australia.
“It is still difficult to hire as there is a big demand from Hong Kong and Singapore which in particular, have higher salaries and lower tax rates. Where we score is that there is a good research environment and people want to work on issues related to India. But it is always a struggle to recruit faculty,” added Kallapur.
ISB and IIMs both however, are convincing their students to go in for PhD programmes so that they can have a supply to recruit faculty.
Professors concur that starting in the mid 1990s, supply of Indian students to PhD programme dried up and on Tuesday the B-schools are consciously promoting the academic career to their students.