Indian companies are likely to hand out an average of 7.7% salary increase this year, with top performers projected to get as much as 60% in raises, the India Salary Increase Survey by consulting firm Aon said on Tuesday.
The pay hike will be better than most major economies, including Japan, the US, China, Singapore, Germany and the UK, where the average salary growth will be between 3.1% and 5.5%. Indian firms paid a 6.4% average hike in 2020.
Among sectors in India, e-commerce and venture capital firms will roll out the best pay hikes (10.1%), followed by high tech (9.7%), information technology-enabled services (8.8%) and entertainment and gaming (8.1%).
Chemicals and pharma firms may give an 8% hike this year, said the survey that collected data from over 1,200 corporate houses. Similarly, professional services are likely to offer 7.9% average pay hikes and financial institutions are expected to give average salary increments of 6.5%.
Sectors which are still struggling to recover, like hospitality, infrastructure, retail, and engineering services, will be the relative laggards and give out 5.5%-5.8% raises.
The Aon survey showed that 93.5% of organisations are expecting an improved or stabilizing business outlook and are positive on increments, while the remaining 6.5% that project a decline in outlook are trying to retain talent by offering close to market average increases.
Almost 60% of the firms that said the business outlook is improving are expected to pay an average 9.1% salary hike in 2021.
The survey said all the key sectors are going to increase salaries this year as business sentiment and outlook has improved and the economy is looking to recover. While this may create more employment opportunities, it may also increase attrition, which was subdued last year.
“The highest-paying sectors in 2021 continue to be the ones from last year like IT, life sciences, e-commerce and fast-moving consumer goods. Sectors that were adversely hit by covid, such as retail, hospitality and realty, are projecting healthy increases of 5-6%. Such numbers reflect their intent to stay relevant and to control attrition, which had increased for these industries last year,” said Roopank Chaudhary, partner in Aon’s human capital business in India.
“The attrition in 2020 was much lower than 2019 largely because of the pandemic and employees wanted to stay back even if there was less hike or no increment. But with the economy recovering, new opportunities will emerge. Our survey showed firms that were not very positive on business outlook, were still talking about giving fairly good pay hikes due to competitive talent pressure,” Chaudhary added.
In 2020, the average attrition for India Inc. was 12.8% against 16.1% in 2019 and in the services sectors, the attrition was 14.5% against 20.7% in 2019.