MNCs still prefer Tier I institutions for long-term R&D: Study

However, Tier II & III institutions offer cost advantage

Multinational research and development companies are increasingly finding quality talent in Tier-II emerging and Tier-III institutions at comparatively lower costs. The costs are 33 per cent lower for graduates from Tier-II emerging institutions and 41 per cent lower for graduates from Tier-III institutions, according to the latest study released by globalisation and market expansion advisory firm Zinnov.

However, when it comes to selecting a university for research collaboration, Tier-I institutions are still preferred for long-term, high-budget research engagements. For instance, the study found that Tier-I institutions received 75 per cent of consulting contracts and 67 per cent of sponsored/open research contracts.

On the other hand, Tier-III institutions received only 7 per cent of sponsored/open research contracts. Tier-II institutions received the bulk of sponsored infrastructure and training/curriculum design budgets.

The Zinnov study covered trends in compensation and collaboration between MNC R&D centres and education institutions in India. For the purpose of the study, campuses were segregated into four categories - Tier-I institutions, Tier-II established institutes, Tier-II emerging institutes and Tier-III institutes - based on various factors like perception of the institute, quality of faculty and industry research collaborations. The survey covered institutes that offer both BTech and MTech degree programmes.

"Leveraging the educational ecosystem in India is an imperative for MNCs looking to drive value and innovation out of their R&D centres in country. MNCs today are looking at universities as more than just a hiring ground; rather, the most innovative centres are putting in place structured programs to increase the relevance of the skills that students acquire on campus, and collaborating with institutions for research projects," said Pari Natarajan, chief executive officer of Zinnov.

According to the study, comparison of salaries of fresh hires (total guaranteed compensation {TGC} or fixed pay) for Tier-I and Tier-II established institutes indicates that engineering graduates from Tier-I institutes are paid 25 per cent to 30 per cent higher than Tier-II established institutes for similar job functions.

While the average TGC for a graduate at a Tier-I institution was Rs 8.07 lakh, the average TGC for a graduate from a Tier-II established institution was Rs 6.49 lakh.

Differential salaries
The numerous reasons for the differential salaries in Tier-I as compared to other tiered institutes include perception of performance and the types of jobs being offered. Graduates from Tier-I institutes are perceived to be more capable to take up important roles in the organisation and are taken in it at higher level/grade. Close to 60 per cent of companies who visit both Tier-I and Tier-II institutes mentioned that students from Tier-I institutes are hired at higher levels (engineer level) whereas others are hired at associate engineer levels.

Thirty per cent of the companies interviewed for the Zinnov's latest study mentioned that although all fresh graduates come in at the same level, students from Tier-I institutes are offered innovation, development, operations research profiles compared to students from Tier-II institutions who are offered testing roles. Graduates from Tier-III institutions are offered IT infrastructure and other support roles.

"The salary differentiation occurs because the companies have different pay bands for each of these job families. Some companies also differentiate the grade in which a student is hired based on the profile he/she is offered. For example, students from the same campus who are offered development profiles are put on a higher grade as compared to those who join the testing function," it said.

MTech salaries at Tier-II established institutes are on a par with those from Tier-I institutes. However, there is a significant difference of 30-40 per cent when compared to Tier-II emerging institutes.