India's average pay hike to decrease in 2025: Here's why
What's the story
Deloitte's latest survey predicts that average salary hikes for Indian companies will continue to decline.
The survey, called India Talent Outlook 2025, predicts an 8.8% increase in 2025, down from the expected 9% rise in 2024.
The report cites global and local economic challenges for this trend.
It also notes that this potential increment could be the lowest in a decade, excluding the years of 2020-21.
Cost optimization
Companies focus on optimizing compensation costs
Deloitte's survey shows that companies are heavily focused on optimizing their compensation cost budgets for the next year.
This is likely to lead to lower salary hikes across sectors.
The report also states that 75% of participating companies intend to either reduce or keep their pay increases at the same level as last year.
Sector impact
Consumer sector to see significant reduction in increment budget
The consumer products sector is likely to see the biggest cut in its increment budget, the Deloitte report said.
The downturn is attributed to an economic slowdown which has caused Indians to spend less on essential goods.
Major firms in this sector have reported declines in their profits and revenues due to these changes.
Performance-based increments
Top performers can expect higher increments than average ones
The Deloitte report indicates that organizations are concentrating on retaining key talent.
Top performers can expect a 1.7x higher increment than average performers, which is slightly lower than last year, the report says.
Employees at individual contributor and junior management levels can expect a 1.3x higher increment than those at the top management level, the survey findings revealed.
Promotion outlook
Promotion-linked pay increases to remain unchanged
While many companies expect to make fewer promotions than last year, the overall percentage of employees getting promoted is expected to remain steady at about 12%.
Most companies don't plan to raise their promotion-linked pay increases compared to previous years.
The survey also shows that attrition in 2024 has moderated to 17.4% but companies remain optimistic about hiring—nearly 80% plan to increase headcount in the coming financial year.