Indian companies project 9.1% salary hikes in 2027, up from 9% in 2026

Indian companies are projected to increase salaries by 9.1% in 2027, marginally above the 9% increase recorded in 2026, as employers balance talent retention with cost pressures, according to Aon’s Annual Salary Increase and Turnover Survey for India 2026-27.

The survey covered more than 1,200 organisations across 45 industries and found employee attrition rose to 18% in 2026, from 16.2% in 2025. The increase suggests employers continue to face retention challenges despite broadly stable salary budgets.

NBFCs lead the salary growth outlook

Non-banking financial companies (NBFCs) are expected to offer the highest salary increases in 2027, followed by energy and real estate and infrastructure, according to Aon’s projections.

The sector-wise estimates are:

• NBFCs: 10.1%

• Energy: 9.9%

• Real estate and infrastructure: 9.8%

• Funds and asset management: 9.6%

• Life sciences: 9.6%

• Automotive and vehicle manufacturing: 9.5%

• Global capability centres (GCCs): 9.4%

Technology consulting and services firms are projected to record the lowest salary increase among the sectors surveyed, at 6.6%, unchanged from 2026.

Banking salary increases are expected to ease to 8.5%, from 8.6% in 2026, while chemicals are projected to see increases of 8%, compared with 8.1% a year earlier.

Real estate and infrastructure is also expected to see a moderation, with projected increases falling from 10.3% in 2026 to 9.8% in 2027. Automotive and vehicle manufacturing is projected to ease from 9.7% to 9.5%.

Attrition rises as retention remains a concern

Overall employee attrition increased to 18% in 2026, compared with 16.2% in 2025 and 17.1% in 2024, reversing the improvement recorded in the previous year.

Involuntary attrition, which covers employee exits initiated by employers, also rose to 4% from 3.4% in 2025.

Sector-level figures show particularly high attrition in parts of financial services:

• Life insurance: 51.6%, compared with 51.7% in 2025.

• NBFCs: 37%, up from 36%.

• Real estate and infrastructure: 21.7%, up from 17.4%.

• Banking: 22%, compared with 21.2%.

• Retail: 20.5%, up from 19%.

• Technology consulting and services: 18.4%, unchanged.

• Technology platforms and products: 13.8%, down from 14%.

The figures indicate differing retention pressures across sectors, with some financial services segments reporting substantially higher attrition than technology consulting and services.

Employers direct pay towards critical skills

Aon said stable salary budgets are allowing employers to target pay more selectively, particularly where market alignment and scarce skills require attention.

“Strong domestic consumption, sustained investment and export growth continue to support business confidence, allowing employers to invest in talent while maintaining cost discipline,” said Roopank Chaudhary, Partner and Rewards Consulting Leader, Talent Solutions, India, at Aon.

The survey found that 62% of companies are budgeting salary increases above 9%. Meanwhile, 60% expect revenue growth of more than 5% in 2026-27, although only 37% anticipate double-digit growth.

The survey also projects real wage growth, which adjusts salary increases for inflation, at 5.1% in 2027, compared with 4.3% in 2026.

AI adoption adds another workforce priority

Workforce investment is also shifting towards digital skills and productivity as AI tools become more established across organisations.

Aon reported that adoption of AI productivity tools rose to 56% in 2026, from 46.1% in 2025. Around 60% of employers are prioritising employee upskilling, while talent premiums for artificial intelligence, machine learning and data science roles increased by approximately 10% from 2025.

“The rapid adoption of AI signals a shift from experimentation to enterprise-wide application. The next priority is translating that momentum into measurable productivity and growth,” Chaudhary said.

Wage Code compliance could affect payroll budgets

Employers are also assessing potential costs associated with Wage Code compliance. According to Aon, 65.4% of employers are already compliant, while another 20.9% expect to be ready within six months.

However, 42.8% anticipate payroll cost increases of at least 1%.

With salary increases, attrition, specialised skill premiums and compliance costs shaping workforce budgets, employers will need to decide how to distribute pay increases across roles and business functions. Aon’s projections indicate a modest rise in average salary increases for 2027, while sector-level differences remain significant.