46% of India Inc to offer double-digit salary hikes in 2023; top performers can get up to 16.5%

Double-digit salary hikes are expected to continue for the second year in a row across a majority of Indian organizations. Despite macroeconomic volatility, salaries in India are expected to increase by 10.3 per cent on an average in 2023, according to Aon India’s latest survey.  While this is a slight drop from last year’s 10.6 per cent, salary hikes have hit a decadal high over the last two years. 

In its 28th Annual Salary Increase Survey, Aon India found that 46 per cent of Indian organizations (nearly 1 in 2 firms) are poised to offer double-digit salary increments to their employees. This is the highest proportion of organizations doing that in the last 7-8 years

Aon also shared that top performers can expect hikes of up to 16.5 per cent in 2023, which is the highest in 10 years. “India continues to have the highest salary increases in the region, and among other major world economies,” the report stated. 

Among the top 5 paying sectors this year are E-commerce, Technology Platforms & Products, Global Capability Centers (GCCs), Tech Consulting and Services, and Financial Services. Meanwhile, Telecom, Retail, and Hospitality are likely to be the most conservative sectors as they are still on the road to post-Covid recovery. “Three-fourth of organizations are talking about a 9-12 per cent salary increase, which is heartening,” Roopank Chaudhary, Partner, Human Capital Solutions, India at Aon, told the media. 

He further explained, “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.”

Aon believes that “unsustainably high” attrition of 21.4 per cent is triggering higher increments across India Inc. As a result, non-merit salary increases (to retain talent) have also gone up.

Pritish Gandhi, Director and Leader of the Executive Compensation and Governance Practice in India at Aon, said, “The non-merit salary increase projections continue to be moving up as firms budget for retaining talent through promotions and off-cycle corrections. As companies look to differentiate and optimize their talent spend, employers are investing more for critical talent in key roles.”

“Organizations must take a strategic approach to total rewards to build a resilient workforce and shape their strategies towards long-term drivers of pay and performance,” he added. 

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