Now, inflation to eat into salary hikes; IT to be hit hardest

Surging inflation will soon start reflecting onto the pay packets with the companies looking at cutting down the salary hikes of their employees for the next year and the high-flying IT space could take the maximum hit.

According to a survey by HR consultancy major Hewitt Associates, IT sector would see the lowest pay hike of 11.3 per cent in India next year, down from 12.5 per cent in 2008.

It would be followed by the ITES sector with the second lowest hike of 11.4 per cent, down from 12.5 per cent in 2008.

The survey of 150 leading corporates in India found that a majority of companies are taking into account inflation and rising input costs for their salary hike budget for next year.

While the year 2008 has still seen a strong average salary increase of 14.8 per cent, the global economic slowdown, US sub-prime crisis and rising inflation have caused Indian companies to revisit budgets for 2009 and the average salary projections for the coming year are lower by a percentage point at 13.9 per cent, Hewitt said.

Interestingly, the pay hikes for both IT and ITES sectors is on the decline in recent years.

The IT industry saw a salary rise of 15.4 per cent in 2007 which came down to 12.5 per cent in 2008. Similarly, the ITES sector witnessed a jump of 14.1 per cent in 2007 while the figure declined to 12.6 per cent this year.

"Adversely impacted by the recent rupee-dollar volatility and the slowdown in the global economy, the IT-ITES sector is treading cautiously on salary and rewards," it said.