Average salary hike to remain 9.4% this year, says Aon India survey
Companies are getting more prudent while finalising their pay budgets. This year the industry is projecting a pay increase of 9.4 per cent, as per the Aon India's Salary Increase Survey. This is almost similar to last year salary rise projections at 9.5 per cent. The study analysed data across 1000+ companies from more than 20 industries.
Anandorup Ghose, Partner at Aon India Consulting, says: "Despite an improvement in macro-economic forecasts - salary increases remain at the same level as was projected in the last fiscal. With increasing maturity, HR budgets are being realigned towards top performers as opposed to the broader population."
This marks a departure from the double digit increments given by organizations since the inception of this study. However, a clear trend is compensation increase to top performers. More and more companies are ready to keep their key talent happy with higher salary increase at an average of 15.4 per cent, approximately 1.9 times the pay increase for an average performer. But, they are also making the bell curve competitive and narrowing the pool they recognize as top performers.
Sectors such as Professional Services, Consumer Internet Companies, Life Sciences, Automotive and Consumer Products continue to project a double digit salary increase for 2018.
Consumer Internet Companies however, over the past 3 years have seen a significant drop of 250 basis points, from 12.9 per cent to 10.4 per cent projected for 2018. Interestingly, the Hi Tech/ Information Technology sector, which has gone through a spate of upheavals in recent times, is projecting an average hike of 9.5 per cent in 2018, whereas the third party IT services which provide majority of the employment in India are projecting an average hike of 6.2 per cent.
Over the years, with increasing pressure on compensation budgets, there is an emerging focus on rationalization of budgets. Companies are increasingly taking into account the base effect e.g., pay increases for top and senior management is consistently going down.
Anandorup Ghose commented, "Pay increases are becoming more nuanced. We are increasingly seeing a multitude of factors impacting salary increases such as size of the company, business dynamics within the sub industry, nature of talent requirements and quite obviously, performance." The attrition rate in India is seeing a continuous downward trend as the overall attrition has come down from an average of 20 per cent in the previous decade to 15.9 per cent in 2017.
