India Inc to see 9.1% salary hike in 2026: EY names sector set to lead growth

India Inc is expected to roll out an average salary increase of 9.1% in 2026, signalling a phase of steady normalisation after years of post-pandemic volatility, according to EY's Future of Pay 2026 report.

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The fourth edition of the survey, which tracks compensation and attrition trends across sectors, indicates that pay strategies are becoming more targeted - with sharper performance differentiation, rising AI-linked skill premiums, and moderated attrition levels.

GCCs to lead salary growth

Global Capability Centers (GCCs) are projected to lead salary growth in 2026, with increments estimated at 10.4%. EY attributed this to sustained global demand and continued investment in specialized digital capabilities. Financial Services follows at around 10%, E-Commerce at 9.9%, and Lifesciences and Pharmaceuticals at 9.7%.

India Inc's attrition moderates

The report points to a gradual cooling in workforce churn. Overall attrition declined to 16.4% in 2025 from 17.5% in 2024. More than 80% of exits remained voluntary, suggesting that talent movement continues to be opportunity-driven rather than restructuring-led.

Financial Services recorded the highest attrition at 24%, particularly in sales, relationship management and digital roles. Professional Services stood at 21.3%, followed by Hi-Tech and IT at 20.5%. GCCs reported relatively lower attrition at 14.1%, reinforcing their growing stability.

From increments to precision pay

Abhishek Sen, Partner and Leader, Total Rewards, HR Technology and Learning, People Consulting, EY India, said compensation conversations are shifting beyond headline increment numbers. 

"We are at a turning point in how organizations think about investing in their people. The future of pay in India is no longer defined by the size of the annual increment alone. It is increasingly about precision – deciding which skills to invest in, which outcomes to reward, and how to balance competitiveness with sustainability," he said. 

Sen added that employees are also recalibrating expectations. "At the same time, employees are looking beyond the size of the increment; they want clarity, fairness, and consistency in how pay decisions are made. As economic growth stabilizes and workforce expectations evolve, the Future of Pay Survey 2025–26 will help leaders navigate this shift with grounded, actionable insights."

AI reshapes compensation models 

With artificial intelligence becoming embedded across sectors, pay models are being redesigned to reflect productivity and measurable business impact. Between 50–60% of large organisations now use analytics in compensation planning. The use of AI across rewards and learning functions has tripled over the past two to three years, highlighting a shift toward more data-driven people systems. 

Emerging technology roles - including AI, generative AI, machine learning, and engineering - can command up to a 40% skill-based premium. "Between 50–60% of large organizations now use analytics in compensation planning, making data-driven decisions a core part of rewards strategy. At the same time, the use of AI across rewards and learning functions has tripled over the past two to three years, signalling a clear shift toward more intelligent and responsive people systems," he added.