India Inc. is decidedly rescinding salary freezes and even making up for ground lost during the downturn. The increments that companies started talking about gingerly late last year are becoming a reality in 2010. Sectors that experienced maximum job squeeze are also making a recovery, though not to the same extent as fast-growing sectors.
A salary increase survey conducted by HR consulting firm Hewitt Associates across 465 companies points to organisations resuming pay raises. Salary increase on average for 2010 in India is projected to be 10.6 per cent, the highest in Asia-Pacific. China and the Philippines follow India with a projected increase of 6.7 per cent and 6.4 per cent respectively.
The projected increment of 10.6 per cent is a three-fifths increase from the actual increase of 6.6 per cent in 2009, according to the survey. Indian-owned companies will in all likeliness outperform MNCs with a projected average increase of 11.4 per cent as against 10.2 per cent by the latter, it says.
Oil and gas along with the power sector has the highest projected salary hike of 12.8 per cent. "Not only have these sectors continued to grow, but are currently witnessing a talent gap," says Sandeep Chaudhary, Leader, Performance and Rewards Consulting for Hewitt in India, explaining high levels of pay hikes.
Salary hikes in banking, financial services and insurance (BFSI) have made a smart return—banking is set to give double-digit increments while in financial services it is still in the region of 8-10 per cent. Average increment in banking was subdued last year and salary freezes ruled across sectors. This year is a different story. "Since Indian arms are contributing to the growth of MNC banks, it's translating into rewards for employees," says E. Balaji, CEO, Ma Foi Management Consultants.
Merit-based increases are getting more aggressive. Says Gautam Chainani, Chief People Officer, Aditya Birla Financial Services, "In financial services there is a move towards aggressive variable pay." The company is handing out 8-12 per cent hikes as against five per cent last year.
Increments in IT services are muted, however.
"That's because business and cost productivity pressures are still high," says an HR executive in an IT services firm, adding, "hikes will be more in the range of six to eight per cent on average."