New Delhi: Struggling with the rising attrition in the tight labour market, companies in India are likely to give a salary increase of 10 per cent next year.
According to the Salary Budget Planning report from global advisory, broking, and solutions firm Willis Towers Watson Willis Towers Watson, companies in India are budgeting a 10% increase for 2022-23, up from a 9.5 percent increase the previous year.
The report says, more than half (58%) of Indian employers have budgeted for higher salary increases for the current fiscal year compared to last year, while a quarter (24.4%) have made no changes to their budget.
Only 5.4% of the budget has been cut since 2021-22, according to the report. According to the report, salary increases in India remain the highest in the Asia Pacific (APAC) region at 10%.
China is expected to grow by 6% next year, Hong Kong by 4%, and Singapore by 4%, according to the report.
The report is based on a survey conducted in 168 countries in April and May 2022, with 590 organisations in India participating.
It also stated that approximately 42% of companies in India have projected a positive business revenue outlook for the next 12 months, while only 7.2% have projected a negative outlook.
Furthermore, information technology (65.5%), engineering (52.9%), sales (35.4%), technically skilled trades (32.5%), and finance (17.5%) are expected to be the most sought-after functions for recruitment in the next 12 months.
Voluntary attrition rates in India continue to be among the highest in the region, at 15.1%, trailing only Hong Kong.
Actual salary increases exceeded budgets last year, owing to better-than-expected business performance and the need to retain talent. Despite the economic headwinds, higher projections for 2023 reflect cautious business optimism and a continued tight labour market, according to Rajul Mathur, WTW Consulting Leader India, Work and Rewards.
He further added the highest salary increases are expected in the financial services, banking and technology, media, and gaming sectors, at 10.4%, 10.2%, and 10%, respectively.
In 2022, we saw significant salary increases across sectors, and a similar trend is expected in 2023. The increased emphasis on technology-enabled growth is driving pay increases for tech talent, especially in the technology, media and gaming, banking and financial services sectors, according to Mathur.
Better-than-expected business performance, according to the report, resulted in higher variable pay-outs across career bands in 2021-22.
According to the report, companies are allocating more variable pay budgets to above-average and top performers.
With such a dynamic business environment and a hot talent market, it is critical for Indian organisations to develop a compensation strategy that is aligned with macroeconomic realities, sector dynamics, business objectives, and employee expectations.
To address the current talent supply challenges, organisations are focusing on long-term incentives, innovative career growth opportunities, flexible working, and overall wellbeing, according to Mathur.
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