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10%-plus salary hikes on the cards for India Inc in 2023

10%-plus salary hikes on the cards for India Inc in 2023

As appraisal cycle has kickstarted, India Inc is poised to hand out double-digit salary hikes on an average in 2023, according to HR consultancy and advisory firms.

Vidya S
  • Updated Apr 14, 2023 2:26 PM IST
10%-plus salary hikes on the cards for India Inc in 2023As appraisal cycle has kickstarted, India Inc is poised to hand out double-digit salary hikes on an average in 2023, according to HR consultancy and advisory firms

Despite global economic uncertainties, India Inc. is poised to hand out double-digit salary hikes on an average in 2023, the second consecutive year of high hikes, mainly to rein in the 20 per cent-plus attrition seen till 2022, according to HR consultancy and advisory firms. Although it is lower than the hike given out last year, it is still a significant double-digit hike, point out the experts, adding that technology, financial services, pharmaceuticals, and retail are set to lead the pack. 

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  • 10%-plus hikes as a way to retain talent  

Global professional services firm Aon’s latest Annual Salary Increase Survey in India projected a 10.3 per cent average salary hike in 2023 compared to an actual increase of 10.6 per cent in 2022. This was based on data from 1,400 companies across 40-plus industries. 

Global advisory, broking, and solutions company WTW’s Salary Budget Planning survey conducted in Q4-2022 projects salaries in India to rise to 10 per cent in 2023, up from an actual increase of 9.8 per cent in 2022. The report pointed out that the salary increase projection for 2023 shows an upward trend across most industries, based on responses from 707 participating companies from India. 

Deloitte India Talent Outlook 2023 pegs that the average India increment in 2023 is expected to go down to 9.1 per cent from 9.4 per cent in 2022. It is based on a survey CHROs of leading organisations. Almost 300 organisations participated—across seven sectors and 25 sub-sectors. One in every three organisations is planning to give double-digit average increments.  

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Rajul Mathur, Consulting Leader, Work and Rewards, WTW India said, “Business opportunity and employee retention are currently the primary driver for salary increases in India. With a projected attrition rate as high as 24 per cent for key talent segments, organisations need to look beyond pay increases and consider adjustments in their benefits, employee experience strategy, career paths, as well as work and stress management support they provide to their employees.” 

  • Lower than last year 

Although slightly lower than last year, the projected increase continues to be in the double digits despite concerns about economic volatility, which may be in response to attrition rates, the Aon report points out. At 21.4 percent, the attrition rate in India for 2022 remained high – a consequence of an ever-changing talent strategy and the ongoing gap between supply and demand of talent. 

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The Deloitte study finds that 2023 increments are expected to be lower across almost all sectors, compared to 2022 actual increments. While the Life Sciences sector is expected to witness the highest increments in 2023, the IT sector will likely witness a major drop in increments as compared to 2022, said the Deloitte study. 

Anandorup Ghose, Partner, Deloitte Touche Tohmatsu India LLP (Deloitte India), said, “The significant attrition levels across industries in late 2021 continued until early 2022. We saw Indian organisations budgeting the highest increment in 2022 over the last four years. What they also did was hire aggressively. This led to employee costs rising faster than revenue growth over the last 3–4 years in almost every other company. Stubborn inflation, higher interest rates, and a slowing economy are likely to make organisations more cautious this year. 

  • Tech, financial services, pharma and retail lead the pack 

Aon has projected 10 per cent-plus hikes for Technology Platform and Products (10.9 per cent), Global Capability Centers (10.8 per cent), Technology Consulting and Services (10.7 per cent), Financial Institutions (10.1 per cent), Fast Moving Consumer Goods/ Fast Moving Consumer Durables (10.1 per cent). 

The WTW report shows that Financial Services, Tech Media and Gaming, Pharmaceutical & Biotechnology, Chemicals and Retail sectors are expected to see the highest salary increases at 10%. On the other hand, salary increases in Manufacturing – Durable goods (9.5 per cent), Manufacturing – Non-Durable goods (9 per cent) and Business Process Outsourcing (9.8 per cent) sectors are expected to be below the industry median, the WTW report said. 

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Roopank Chaudhary, partner, Human Capital Solutions, India at Aon, said, “India Inc. has awarded aggressive salary increases over the last two years, which has some companies grappling with higher wage bills. Globally connected industries, such as Technology Platform and Products, are somewhat cautious in their salary budgets while industries driven by domestic demand, such as Manufacturing or FMCG/FMCD, are bullish on their budget planning as compared to their five-year averages.” 

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Published on: Apr 14, 2023 2:16 PM IST
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