Paid Internships vs Unpaid Internships: The importance of compensation

    Reading up on paid internships vs unpaid ones and why and when you should opt for on? We explore the importance of a stipend during an internship.


    Reading up on paid internships vs unpaid ones and why and when you should opt for on? We explore the importance of a stipend during an internship.

    A summer internship is an opportunity to work in a company and gain work experience. An important aspect of the internship is the compensation or stipend offered to an intern for their services in the company. Here we discuss the pros and cons of paid internships vs. unpaid internships and how much weightage it should hold on your decision to join an internship.

    Company Perspective

    Students more often than not assume that companies are skimping of budgets by offering unpaid internships to students and that they get ‘free labour’ under the pretext of internships. However, there are various business and strategy decisions that go into deciding this at the company end.

    Reasons why paid internships are offered –

    1. To attract the best talent –

    Since a lot of MNCs offer high internships stipends, the rest have to follow the norms to attract the best talent. This is especially true in a campus placement where many companies vie for the best students

    2. To motivate and bring accountability –

    College interns can be tricky to manage, they are not full-time employees so are not bound by contracts. By offering the chance to earn at the end of internship, only on the completion of work, the company can get quality work done from the interns

    Reasons why unpaid internships are offered –

    1. Unaccounted in budgets –

    Companies often do not have a strategy plan for getting the right work done from their interns. This means that there is no revenue expectation and hence no allocation in the budgets as well

    2. CSR activity –

    Training students could be a part of their CSR activity and they don’t really need interns. In this situation, they cannot spend on their interns inflating both their time and money budgets. As it is they are spending their man hours in training the students

    Deciding between a Unpaid and Paid Internship

    A paid internship certainly makes life easy for a student. You can earn some extra pocket money in the summer and save up for the rainy day in college. Bagging a paid internship also elevates your value during your placements and future job searches.

    Internship compensation also includes a wide range of options like monetary compensation, perks like free products and services from the company as well as a certificate of completion. Among these, the certificate of completion is crucial and you should not even join an internship where they are not offering you this!

    The two most important parameters you need to keep in mind are the prestige/value of a company and the work or job role that you are offered, in deciding whether to go in for a Paid or Unpaid internship.

    Prestigious Company, Great Job Role

    Paid Internship – This is a golden opportunity! There are no cons to this and you should definitely apply to the company.

    Unpaid Internship – You should still take the role because a good brand name and role will help you in future placements. You can always earn during your college year by taking up freelance work or other paid internships.

    Prestigious Company, Generic/Unskilled Job Role

     Paid Internship – The Brand name of a company matters however you will not get the maximum benefit of the internship learning experience. For example, if you are looking for a career in coding but you get a social media internship in a major FMCG company then you need to evaluate how the experience will affect your career. If Social Media is something you know you are not interested in then opt for something more desirable in a job role

     Unpaid Internship – Choose this opportunity if you are not getting any other internships because the brand name of the company will pull you through during the placement season

    Regular Company, Great Job Role

     Paid Internship – This is definitely a good opportunity and you should not lose it.

     Unpaid Internship – Here the focus is on the job role, you will know for certain if you are suited for a particular career through this internship and it is more valuable than anything else! Many startups fall under this category as they are doing ground-breaking work but are working on shoestring budgets and have no extra budgets for interns.

    Regular Company, Generic/Unskilled Job Role

     Paid Internship – Take this role if you have no other options, instead of wasting your summer this is a good opportunity to get some work experience and money. These internships could be form filling/data entry jobs which add little value to your learning

     Unpaid Internship – Try to avoid these roles as they do not bring anything to the table. Instead, you can work on projects or continue the search for better internship roles.

    You should always evaluate your own worth and what the internship experience helps you achieve. You should definitely learn in the process and use the experience for your career.

    If you are looking for paid internships at some of the top companies in India, apply here.