Average salary hike to stay 9.4 percent this year, says Aon India survey
As per the survey, companies in India gave an average pay increase of 9.3 percent during 2017 marking a departure from the double-digit increments given by organizations since the inception of this study.
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Aon, a global professional services firm providing a broad range of risk, retirement and health solutions, released the 22nd edition of its annual Salary Increase Survey in India. The study, the largest and the most comprehensive of its kind in India, analysed data across 1000+ companies from more than 20 industries.
As per the survey, companies in India gave an average pay increase of 9.3 percent during 2017 marking a departure from the double-digit increments given by organizations since the inception of this study. The projections for 2018 are also expected to be similar to 9.4 percent highlighting increasing prudence and maturity being displayed by companies while finalising pay budgets.
The focus on performance is getting sharper year-on-year. A top performer is getting an average salary increase of 15.4 percent, approximately 1.9 times the pay increase for an average performer. Moreover, the bell curve is sharpening with a significant drop in the percentage of people in the highest rating.
Anandorup Ghose, Partner at Aon India Consulting, commented, “Despite an improvement in macro-economic forecasts - salary increases remain at the same level as was projected in the last fiscal. With increasing maturity, HR budgets are being realigned towards top performers as opposed to the broader population.”
Sectors such as Professional Services, Consumer Internet Companies, Life Sciences, Automotive and Consumer Products continue to project a double-digit salary increase for 2018. Consumer Internet Companies, however, over the past 3 years have seen a significant drop of 250 basis points, from 12.9 percent to 10.4 percent projected for 2018. Interestingly, the Hi-Tech/ Information Technology sector, which has gone through a spate of upheavals in recent times, is projecting an average hike of 9.5 percent in 2018, whereas the third-party IT services which provide the majority of the employment in India are projecting an average hike of 6.2 percent.
Over the years, with increasing pressure on compensation budgets, there is an emerging focus on rationalization of budgets. Companies are increasingly taking into account the base effect e.g., pay increases for the top and senior management is consistently going down.
Anandorup Ghose commented, “Pay increases are becoming more nuanced. We are increasingly seeing a multitude of factors impacting salary increases such as the size of the company, business dynamics within the sub-industry, nature of talent requirements and quite obviously, performance.”
The attrition rate in India is seeing a continuous downward trend as the overall attrition has come down from an average of 20 percent in the previous decade to 15.9 percent in 2017.