The average salary increase in India is forecasted to rise by 10% in 2023, up from an actual increase of 9.8% in 2022, reveals latest Salary Budget Planning survey by global advisory, broking and solutions company WTW.
Salary increases across markets in Asia Pacific (APAC) continue to rise and are expected to be equal as last year or higher in 2023.
The survey of over 700 companies in India found that salary increases in India continue to be the highest in the region. China is projected to see an increase of 6%, Vietnam at 8%, Indonesia at 7%, Hong Kong at 4% and Singapore at 4% this year.
Unlike developed markets in the west, there appears to be limited corresponding impact of inflation on salary budgets in India, which have historically been higher than CPI (consumer price index) based inflation.
Economic outlook, hiring and attrition rates
Fewer companies projected a positive business revenue outlook for the next 12 months (36%) in Q4 2022 compared to 52% in Q4 2021. However, close to 80% of organisations feel that they have similar or upward business revenue outlook for the next 12 months, implying that overall business confidence remains high.
The report also identifies ‘hot jobs’ for recruitment in the next 12 months, namely roles in information technology (61.1%), engineering (54.4%), sales (38.9%), technically skilled trades (35.4%) and finance (11.9%).
“Business opportunity and employee retention are currently the primary driver for salary increases in India. Organisations will need to closely monitor economic indicators and the labour market while being flexible in planning their salary budgets. With a projected attrition rate as high as 24% for key talent segments, organisations need to look beyond pay increases and consider adjustments in their benefits, employee experience strategy, career paths, as well as work and stress management support they provide to their employees," said Rajul Mathur, Consulting Leader, Work and Rewards, WTW India said.
“As the post-pandemic business strategies in several sectors firm up, workforce recalibrations are also taking place. Layoffs are reflective of this recalibration but that does not imply a change in the general positive business outlook," added Mathur.
India’s overall voluntary attrition rate in 2022 remained high across sectors like technology, SSO (shared services and outsourcing) and financial services compared to 2020.
Sectoral trends in India
The salary increase projection for 2023 across most industries shows an upward trend.
Financial services, tech media and gaming, pharmaceutical & biotechnology, chemicals and retail sectors are expected to see the highest salary increases at 10%.
On the other hand, salary increases in manufacturing – durable goods (9.5%), manufacturing – non-durable goods (9%) and business process outsourcing (9.8%) sectors are expected to be below the industry median.
The report also finds that salary budget allocated to variable pay in 2022 for performers across bands, remained in similar proportion as 2021.
The report looks at a range of job grades across various industry sectors and summaries the findings of WTW’s annual survey on salary movement and reviews practices as a means of helping companies with their compensation planning for 2023 and beyond.