Merely 8% companies in India expected to offer more than 10% salary hikes, says Deloitte survey

• According to Deloitte India’s 2020 Workforce and Increment Trends Survey, almost half of the companies in India are projected to extend less than 8% increments.
  
• Only 8% companies are expected to offer over 10% hikes in 2020.
  
• The average increment in India is expected to be nearly 7.8% this year — compared to 8.2% last year.
  
• IT product and e-commerce employees have little to worry about as they are expected to offer double digit salary increases.

This year, appraisal season might come and go without making a difference to your pay packet.

According to Deloitte India’s 2020 Workforce and Increment Trends Survey, almost half of the companies in India are projected to extend less than 8% increments. Moreso, a mere 8% of companies could offer hikes over 10% in 2020.

It means the average salary increment in India is expected to be nearly 7.8% this year — compared to 8.2% last year.

As per the survey, senior management has more to worry about. These employees will receive two-thirds of the increment given to middle management employees.

“The decrease in salary increment budget is in line with the higher margin pressure on companies, economic headwinds, and the need to gradually slow down white-collar pay growth in India to become more globally competitive,” the survey said.

This figure drops even further when adjusted to the employee headcount of a company. As per the findings from Deloitte, IT sector aside, the pay hike slumps to 6.8% for all sectors, depending on the company size. This is especially applicable to the manufacturing sector, which has witnessed the sharpest downturn over the past few quarters. This is followed by infrastructure, real estate, shadow banks and telecom.

IT and e-commerce employees have nothing to worry

However, IT product and e-commerce employees have little to worry about as they are expected to offer double digit salary hikes. This is because automation and digital skills are high in demand in the job market.

The salary hikes across the digital areas will vary from 14% to 18%, Ajay Shah, VP and head of recruitment at TeamLease Services told Business Insider.

“Salary increments in India are likely to transition from a more classical rule-bound approach to one which is far more based on individual performance and skills. Roles that combine functional knowledge with technology are likely to command a significant premium, making pay decisions far more driven by skills that employees bring as opposed to simple annual corrections,” said Anandorup Ghose, partner at Deloitte India.

Over the past years, there have been a lot of back and forth over the rationale behind pay hikes. “There is a need for greater responsibility in this process of salary budgeting as compensation cost ratios are increasingly becoming a sore point in boardrooms across the country. The talent market priorities are different from what they were five years ago, and our pay budgeting process and data needs to reflect that,” Ghose added.

Most of the companies in India differentiate pay increases on the basis of past-year performance while a few focus on employee potential.

See also:
Don’t expect more than 10% salary hike this year unless you are an AI expert