India inc. set to offer average salary hikes of at least 10.4% in 2023, says Aon

• Indian companies to increase the salaries of its employees by at least 10.4% on average in 2023.
• The average salary hike in percentage terms for 2022 is highest in India as compared with other big countries, including the USA, the UK and Japan.
• The e-commerce sector registered the highest growth in terms of salary hike – at 13.7% – in 2022.

Double digit salary hikes are here to stay for at least another year. The Salary Increase Survey report by AON says that Indian companies are expected to boost average salaries by at least 10.4% in 2023, a tad lower than the 10.6% given in 2022 so far.

The average salary hikes in percentage terms for 2022 is highest in India as compared with other big countries, including the USA, the UK and Japan, the report said.

Source: AON report

“Despite the global recessionary headwinds and volatile domestic inflation, salary increases projected in India for 2023 are in the double digits. This increase is a reflection of the confidence that corporate India has in its strong business performance,” said Roopank Chaudhary, partner, Human Capital Solutions, Aon India.

Business leaders, however, must make decisions that ensure their workforce remains resilient today as well as into the future, he added.

Sector-wise increment

The survey also found that the e-commerce sector witnessed the highest growth in terms of salary hike – at 13.7% – in 2022 so far. The e-commerce sector is expected to further see average salary hikes of 12.8% in 2023.

A similar trend is projected for the professional services and information technology sectors as well. Both are likely to witness average salary increments of 12.4% and 11.3%, respectively, in 2023.

However, the cement sector, which was one of the most-hit sectors during the Covid pandemic, is projected to give the lowest average salary hike at 8.7%. The hospitality and fast moving consumer goods (FMCG) sectors are also likely to witness one of the least hikes in 2023 at 9% and 9.9%, respectively.

Source: AON report

“Volatility is a key determinant of salary increases by industries – the top salary increases are in the most volatile industries. As the broader economic circumstances impact the talent landscape, businesses must create holistic rewards strategies unique to their situation and sector to retain and attract the talent they need,” Jang Bahadur Singh, director, Human Capital Solutions at Aon in India, said.

The junior management employees will also see the maximum average salary increments – at 10.8% – in 2023, in comparison with the middle and senior management, the report said. However, the salary hike percentage for junior management is expected to be lower than the 11.1% in 2022.

The report also highlighted that the overall attrition rate is also expected to go down from 21% in 2022 to 20.3% in 2023.

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