CTC V/s IHS In-Hand Salary Reality of 100 Lakh Package at IIM/ISB/IITs

CTC V/s IHS 

In-Hand Salary 

Reality of 100 Lakh Package at IIM/ISB/IITs

Newspapers flash first page with headlines of Top Graduates grabbing packages worth 1 Crore.

Many  grabbed a similar offers  years ago.

In this career insight, I will be uncovering the reality of inflated CTCs, their break-up, and the actual in-hand salary to kill the much-needed information asymmetry in society.

Here we go-

1. Culture of Inflated CTC

Let's start with facts.

The numbers reported are NOT false CTC reported by organizations and MBA schools.

There are 3 parties involved.

A. Companies do incur costs beyond in-hand salary.

Eg- insurance, travel, or other assets provided to you.

It becomes beneficial for the employer to inflate CTC to attract better talent.

B. #MBA schools share the same CTC figures to attract a better pool of students.

C. Individuals maintain the story to the main societal status.

It creates a win-win for all 3 parties involved.

2. Components of CTC

2.1 Joining and Annual Bonus

At BCG, I was given an annual bonus based on my and the firm's performance.

Similarly, I was eligible for getting a joining bonus as well.

This component could be between 10%-20% of your CTC.

2.2 ESOPs and Allowances

ESOPs are prevalent in start-ups.

They get encashed when you stay with the company for an extended period of time.

It is a retention strategy by employers so you stay longer.

This number can range from 10%-25% of your annual CTC.

It, however, diminishes the in-hand salary you will get from the firm.

2.3 Taxation

If you are employed at firms such as Amazon, BCG, or McKinsey & Company, you will fall into the 30% bracket in India.

I got lucky on this component as I was employed in Dubai.

However, it's a significant component that diminishes your in-hand salary.

3. In-Hand Salary (drumroll)

Overall, 20-40% of your CTC can be safely eaten up by the 3 components discussed above.

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I have always maintained salaries should not be the number priority when picking a #career.

Salaries are a sensitive topic and employers typically hide details to ensure better retention of underpaid talent.

The objective of this career insight was to kill this fear of missing out by many young professionals who aim for careers in private equity, technology, and consulting because of the rosy picture painted.

Choose a career that follows your calling and skills.

Money typically follows