Pharma and semiconductors lead India’s 2026 pay hikes while IT services slips to 6.9%

India Inc is set to keep salary increments broadly stable in 2026, but the gap between sectors is widening sharply, with pharmaceuticals and semiconductors emerging as the strongest pay leaders while IT services records the steepest slowdown.

Deloitte’s India Talent Outlook projects an average salary increase of 9.1% in 2026, up marginally from 9.0% in 2025.

PHARMA, SEMICONDUCTORS AND MANUFACTURING LEAD

Among the top-paying sectors, pharmaceuticals and semiconductors are projected to offer 10.1% average increments, significantly above the India Inc average.

Clinical research organisations are expected to lead all sectors at 10.2%, while automotive OEMs and renewables are projected at 10.3% and 10.4%, respectively. Manufacturing as a whole is expected to remain strong at 9.8%, reflecting sustained demand for skilled talent in operationally intensive industries.

The life sciences sector is also expected to remain buoyant, with projected salary hikes of 9.9%, supported by steady hiring demand and specialised skill requirements.

IT SERVICES TAKES A CAUTIOUS TURN

In contrast, IT services is projected to offer average salary hikes of just 6.9% in 2026, down from 7.6% in 2025, making it the lowest among major sectors tracked in the survey.

IT product companies are expected to fare better at 9.2%, though still slightly below last year’s 9.3%. Global capability centres are projected at 8.8%, down from 9.0%.

The data points to a more cautious compensation stance in technology services, where firms are balancing slower demand in some export markets with continued investment in AI and automation. Deloitte said both product and services firms have reduced projections by 10 to 70 basis points compared with last year.

A BUYER’S MARKET IS RESHAPING PAY

Deloitte’s findings suggest companies are no longer responding to attrition with aggressive salary corrections.

Attrition edged up only marginally to 17.6% in 2025, from 17.4% in 2024, but organisations have largely held increment budgets steady, indicating that the labour market has stabilised. Deloitte partner Anandorup Ghose said companies are operating in a “buyer’s market” across most skill categories, with a stronger focus on productivity and directed skilling spend.

This shift is also visible in performance management. The share of employees receiving the highest rating on a five-point scale fell from 10% in 2024 to 7% in 2025, while around 16% of the workforce now falls in the bottom two rating bands.

PROMOTIONS RISE EVEN AS TOP RATINGS FALL

Despite tighter performance calibration, promotions are increasing. Deloitte’s survey shows the share of employees promoted rose to 14% in 2025, up from 12% in 2024.

That means promotion rates are now nearly double the proportion of top-rated performers, suggesting companies are rewarding not only current performance but also future potential and readiness. However, Deloitte cautioned that organisations will need to balance this approach carefully to avoid long-term title inflation.

SKILLS, NOT JUST SALARIES, DRIVE RETENTION

The report also points to a structural shift in how companies approach talent development. Nearly three-quarters of organisations now have both behavioural and technical competency frameworks integrated into performance management and career development.

Virtual learning accounts for nearly 70% of training delivery, though companies continue to report better outcomes from in-person formats. The biggest challenge, Deloitte said, remains measuring learning impact and balancing business priorities with time for upskilling.

For employers, the 2026 cycle will be less about headline increments and more about precision: who gets rewarded, for what skills, and how fast they can be moved into higher-value roles.

For employees, the message is equally clear. In a market where average hikes remain steady, sector choice and skill relevance will increasingly determine whether pay keeps pace with ambition.