India Inc salary hike dips to 10.3%; lower than last year

Employees in India are expected to get an average salary hike of just 10.3% this year, lower than 10.6% last year, as companies are taking a cautious stance and are giving higher focus on merit increases, according to Aon Hewit, HR consultancy. 

In terms of salary rise India continues to lead the Asia Pacific region, however, India and China are the only two countries who have reported a slight dip in pay hike.

Since 2012, there has been a status quo in general compensation trends in India as average salary rise is hovering around 10% levels.

The plateauing of 'double digit' salary increases in India is a sign of market maturity and a cautious approach to stay competitive in the APAC region. This is the "new normal" the Aon Hewitt's Salary Increase Survey that analysed data across 700 companies, said.

Anandorup Ghose, Aon Hewitt India Partner, said that these numbers reflect the fact that organisations are becoming "mature" and companies are taking "very clear steps to arrest the steady increase in compensation budgets."

"We have seen 15.6% and 12.6% salary increase in the past, that is not sustainable. This (10.3 per cent) is a far more sustainable level that we are seeing," Ghose added.

Even as average compensation levels have seen a slight dip, larger proportion of company budgets is being allocated to "key talent". Key talent would mean high potential and hot skills apart from high performers.

The payout gap between an average performer and key skills is growing year on year. At 63%, this is the highest differentiation India Inc has observed, Ghose said.

Interestingly, the 'early stage companies/start-ups' stand out despite being in the pre-profit stage for over three years and continue to have an aggressive stand on pay.

At 15.6% salary increase (start-ups) projected for 2016, they feature as number one, with the closest second being Life Sciences at 11.6%.

Meanwhile, attrition rate in India is dropping. At 16.3%, it is the lowest that corporate India has observed since the financial crisis in 2009.