The 17th edition of Annual Salary Increase Survey by global human resource consulting firm Aon Hewitt has indicated that the Indian IT sector is likely to give lower increments this year. The report mentions that reflecting the growth expectations of 5%, India Inc projects an average salary increase of 10.3% for 2013. SandeepChaudhary, Partner Talent & Rewards at Aon Hewitt India said that this increase is among the lowest the country has seen so far. Chaudhary further said, “Though business sentiment is strengthening on account of inflation reaching a three year low and stock markets rising upwards, the cautious streak is evident in the projected salary increase numbers.”

The report says that the Pharma industry in India will be the front-runner in salary increments with 13.5 per cent projections for 2013. Overall healthcare and life sciences sector also reported the highest salary increase average at 13.1 per cent. In the FMCG sector, the salary increase projections for this year stand at 12.3 per cent.

IT sevice organizations are projecting a conservative salary increase of 9.6 per cent. The report indicates that factors like margin compression, a cautious outlook in terms of the global economic state and large bench strength have caused this shift. According to the report, growth opportunities in the domestic market and greater penetration in Tier 2 cities have fuelled a higher salary increase of 11.2 per cent in the IT Product organization. However, there has been a dip in salary increase projections in the semiconductor industry, which has reported a salary increase of 11.3 per cent, lower to the figure of 12.1 per cent in 2012.

The report indicates one remarkable trend in increments managed by the organizations. It points out that with shrinking salary budgets, organisations are creating sharp differentiation in salary increases between their key talent and the rest of the population. Over the years this gap is widening. This year, key talent (Hi-Potentials, Hi-Performers & Critical Talent) is projected to get an average increase of 14.1%.
Sandeep added, “Cost consciousness and performance orientation are the key themes this year. Organizations are looking at compensation and productivity together and hence closely evaluating the return on compensation spent”.