India Inc salary to rise by 11.9% in 2012: Aon Hewitt

"The number mirrors a positive yet cautious outlook as organisations strive to take a balanced view in light of the uncertain economic environment," the survey said.

Sandeep Chaudhary, practice leader, Compensation Consulting, said, "The economic growth in 2011 was hit by stubbornly high inflation, high interest rates, a slowing global economy and a policy paralysis in India.

However, we are seeing encouraging signs in recent weeks on business sentiments. While organisations across industries are keeping a keen and watchful eye on this oscillating macro-economic environment, the number reiterates that organisations are taking a long-term view on talent."

Salary Increase Projections across Employee levels

Employee group

2011 Increase

2012 Projection Top /Senior Management11.20%11.10% Middle Management12.50%12.00% Junior Manager/Sup/ Prof.12.70%12.30% General/Entry Staff12.00%11.80%  Source: Aon Hewitt India Salary Increase Survey 2012

The front runner for this year’s salary increase was to be in the Pharmaceutical Industry, with a projection of 13.3% for 2012, riding high on a surging year-on-year growth with a CAGR of 11%.

The second highest salary increase was projected to be in the Engineering Design/Services with a salary increase of 13%, which was 1.1% higher than the India average.

Infrastructure, heavy engineering and fast-moving consumer goods (FMCG) and fast-moving consumer durables (FMCD) sectors would continue to get higher salary increases than the country average in 2012. The auto sector will have a marginal salary increase over the India average, owing to better auto volumes for January 2012.

The power sector also projected a modest 11.1% salary increase, propelling the projection for energy sector down to 11.8%. This sector had topped the chart last year.

Salary Increase Projections across Industries
Industries	2012 % (Increase)
Overall	11.9
Pharmaceutical	13.3
Engineering Design / Services	13
Infrastructure	12.9
Chemicals	12.6
Engineering/Manufacturing	12.4
FMCG/FMCD	12.4
Automotive/Vehicle Manufacturing	12.4
High Tech/Information Technology	11.9
Retail	11.8
IT Enabled Services (ITeS)	11.8
Energy (Oil/Gas/Coal/Power)	11.8
Metals	11.3
Telecommunication Services	11
Financial Institutions	10
Source: Aon Hewitt India Salary Increase Survey 2012

The information technology (IT) and outsourcing sectors reported a relatively positive outlook on salary increases (11.9% and 11.8%, respectively), despite their continuing concerns with the global economy. The depreciation of the rupee against the dollar, growth in emerging verticals such as retail, healthcare and utility, new business models and organisation efficiencies, among others, were found to be the key contributing factors.
 
Telecom and financial Institutions projected the lowest salary increases for 2012 at 11% and 10%. According to the survey, this was due to the sector being plagued by various regulatory hurdles, policy issues and the slowdown in the global economy.
 
While the projections across all levels of management were lower than 2011, junior and middle management were expected to get the highest increase for 2012 (12.3% and 12% respectively). Among the other emerging trends, salary increases provided to critical talent were consistently two to three percentage points more than the overall increments in an organisation for three years in a row now. This highlighted that India Inc. was concentrating efforts on identifying top talent and rewarding them accordingly. Spending on variable pay as part of total compensation was also seen to be steadily growing over the past decade.
 
The survey covered 550 organisations representing 19 primary and 31 sub-sectors. The data for the survey was collected between November 2011 and January 2012.