India continues to remain cautiously optimistic on business performance as far as the business outlook is concerned. The graying of salary increases in India is a reflection on how India Inc. is coming of age. The macro question remains: if this represents a blip or a trend! These are among the findings of the 21st Annual India Salary Increase Survey by AON Hewitt.
The survey projects a drop in pay increases to an average of 9.5 percent across industries. While the inequity of pay remains a concern, the key reasons cited by the various employees across 1,000+ firms for voluntary attrition are role stagnation and limited growth opportunities.
For almost a decade, manufacturing firms in India are budgeting higher salary Increases than services firms. A lower base and higher expectations has driven this behavior. Although, with increasing pressures on margins and improved salary base, the difference in the budgets has been gradually declining since 2013. Along with high performance – high potential and hot skills remuneration are now gaining acceptance.
The gradual slowing of pay increases and higher emphasis on productivity and performance indicates the ‘graying’ of salary budgets for India. Some industries are impacted more than others – and AON Hewitt sees faster moderation of pay increases in industries such as technology, telecom, consumer etc.
Inspite of lower salary increase budgets, top performers will continue to get lucrative hikes as companies focus on performance and criticality. While attrition was contained at a broader level, key talent attrition takes a hit. Differentiated people and pay practices slowly taking the edge away from compensation for Key Talent Management.
Projections for 2017 include salary increase projections across consumer Internet companies, life sciences, professional services, chemicals, entertainment media, automotive/vehicle manufacturing, and consumer products.
The study, the largest and the most comprehensive of its kind in India, analysed data across 1,000+ companies.
Anandorup Ghose, partner at Aon Hewitt India, said: “Political changes and economic headwinds have had an impact on business performance. However, the trend this year reflects a gradual slowing of pay increases and higher emphasis on productivity and performance – quite literally a ‘graying’ of salary budgets for India.
“The last year has shown organizations take a strong view towards performance differentiation and not only have bell curves become sharper, the pay differentiation between top and average performers has also increased.”