Salary hikes in India to dip to 8.9% in 2026 as attrition stays at 13.6%: Study

Salary increments across India Inc. are set to remain subdued in 2026 as companies tighten compensation budgets against a backdrop of economic uncertainty, according to a survey by HR consulting firm OMAM. The study projects an average salary increase of 8.9% for 2026, slightly below the 9.1% recorded in the previous cycle.

The findings, based on employer responses between September and October, suggest that attrition will also remain elevated. The report estimates average voluntary turnover at 13.6% next year, broadly in line with last year’s levels.

OMAM’s report shows the steepest deceleration in sectors that have faced prolonged margin pressure. In IT, average increments are expected to fall to 7.0% from 8.2%. E-commerce is projected to ease to 9.2% from 10.0%. FMCG and consumer durables are forecast to decline to 8.7% from 9.5%, while the automobile sector is likely to see hikes of 9.8%, down from 10.5%.

Industrial sectors are also moderating their budgets. Core industries are expected to see increments slip from 9.0% to 8.7%. Chemical companies may reduce hikes from 9.5% to 9.0%.

Only a handful of pockets are showing resilience. Insurance increments are expected to hold steady at 9%. Telecom is the sole sector projected to move higher, inching up to 9.1% from 9%.

A Shift in Compensation Strategy

OMAM said the moderation reflects a broader shift in how organisations design pay. Instead of broad-based salary increases, companies are directing a larger share of their budgets towards top performers and employees with specialised or critical skills, while flattening raises for most of the workforce.

The firm noted that businesses with stable market pay positions are channelling more resources into benefits, retention mechanisms and development-linked incentives rather than fixed pay increases.

Geopolitical tensions, global trade disruptions and inflation that is now easing have also prompted companies to adopt more cautious compensation planning for the year ahead.

Persistent Attrition Pressures

Despite restrained pay growth, talent churn remains a pressing concern. The report expects India’s average attrition rate to stay at 13.6%, driven by compensation mismatch, career stagnation, cultural issues, lack of recognition and burnout.

IT services faces the highest churn, with one in five employees likely to explore opportunities in global capability centres or adjacent tech sectors. In banking, financial services, retail and e-commerce, attrition is expected to trend towards the 17%–18% range.

With salary growth tapering and attrition unlikely to ease, OMAM said companies are increasingly relying on variable pay, sharper performance differentiation and internal mobility to retain talent. Upskilling pathways and career progression frameworks are also gaining importance as organisations seek to protect critical roles.

The data suggests that 2026 will be shaped by cautious spending, selective investment in niche talent and continued competition for skilled workers — even as overall salary growth remains subdued.