India Inc. is expected to see a 6-12% increase this year in a highly competitive job market where companies are searching for experts. This is prompting companies to offer an estimated 9-12% salary hike, according to a study by the Mint + Shine Talent Insights report. 34% of HR executives said that the primary goal was to boost employee morale and prevent them from switching loyalties.
Nearly 3000 HR executives and job seekers were surveyed during the quarterly study conducted between January and March. Another significant segment, about 25%, is planning a more moderate increase of 6-8%. This aligns with the rising cost of living and acknowledges the value of experienced employees contributing to the company’s success.
This increase comes at a time when the Indian industry has seen a significant drop in hiring numbers over the past year. During the early parts of 2021 and 2022, companies from various sectors were hiring rapidly to expand their traditional businesses into digital ventures. However, since the second half of 2022, macroeconomic slowdown, global conflicts, and private equity firms reducing their investments have impacted the IT, startup, and retail industries.
According to a study by audit and consulting firm Deloitte India, the average salary hike in Indian companies is expected to decrease from 9.4% last year to 9.1% this year. The IT sector is particularly facing budget cuts from clients, marking the worst increase in a decade.
Given the demand for certain profiles, they are expected to see better growth. Ruchira Bhardwaj said, “In recent years, there has been a trend of more substantial salary increases for technical and digital roles across various sectors, while traditional roles have seen stable, moderate growth. Salary increases will follow the same pattern as last year.” She is the Chief Human Resources Officer at Kotak Life.
According to the Mint+Shine study, only 2% estimate a minimum increase of 0-2%. This is due to the economic challenges faced by some industries and the tight budget constraints limiting their ability to offer significant adjustments.
However, even with tight budgets, companies are ensuring that top performers receive significantly higher salary increases, which can be 1.7x-1.8x the average salary increase.
Companies like Tata Steel have made changes to their evaluation process and organizational bands to provide more opportunities for their top performers. The steel manufacturer launched the Accelerated Career Enhancement (ACE) scheme in 2023. Through this policy, sub-bands within junior to middle management levels have been introduced to provide additional opportunities for career progression based on certain eligibility criteria. In response to an email from Mint, the company stated, “…eligible high-performing officers are given additional opportunities to apply for next-level roles and can be promoted in a fast-track manner within the organization.”
Promotions are another tool that are widely used to halt exits. “With the introduction of “Sub-banding and ACE we have observed a 40% dip in the attrition rate of high performers from that of the previous year,” said Tata Steel.
But rolling out promotions at large scale without looking into the impact within the team may backfire .
“While promotions can serve as a tool for retaining talent, they should be equitable, merit-based, and integrated into a comprehensive talent strategy,” said Akhil Gupta, chief executive, Shine.com. Gupta noted that leveraging AI-driven analytics to augment the appraisal process can enable more precise evaluations.
But managing high potentials will remain a challenge and according to Sheetal Sandhu- Group CHRO, ICRA, although firms have recovered from the “Great Resignation, they will continue to face headwinds in the “war for talent”.
Sandhu noted that organisations are experimenting with dual-role opportunities, more aggressive career paths, and early CXO roles to build an in-house leadership pipeline.
Promotion is another tool that is commonly used to stop attrition. Tata Steel said, “With the introduction of sub-banding and ACE, we have seen a 40% drop in the attrition rate of high performers compared to the previous year.” However, giving promotions on a large scale without considering the impact within the team can be harmful. Akhil Gupta, CEO of Shine.com, said, “While promotions will work as a tool to retain the talent, they should be fair, merit-based, and integrated into a larger talent strategy.”Mr. Gupta added that leveraging AI-driven analytics to enhance the evaluation process can lead to more accurate assessments. But managing high potentials will remain a challenge, and according to Sheetal Sandhu, Group CHRO of ICRA, although companies have recovered from the “great resignation,” they will continue to face challenges in the “war for talent.” Sandhu mentioned that organizations are experimenting with dual role opportunities, more aggressive career paths, and early CXO roles to build an in-house leadership pipeline.
