2025 may not be a great year for pay hikes—consulting firms expect salary revisions in corporate India to be lower than what companies offered last year. Why have Indian firms turned cautious in doling out annual raises this year? Mint explains:
What raise can you expect this year?
Consulting firm Aon estimates corporate employers to offer an average hike that will be lower than last year’s raise of 9.3%. Its peer Mercer’s Annual Total Remuneration Survey predicts a 9.4% overall salary uptick across industries in India for 2025 versus an estimated 10% last year. Even the top performers have little to rejoice since firms will scrutinize them more before offering a better raise. According to consultants, when the absolute pay levels were lower, the percentage hikes were higher, but as the base salaries have risen in many sectors, the hikes in terms of percentage would come down.
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What explains the low hikes?
While the average raise is estimated to be lower than last year’s, the decline isn’t much. Slowing corporate earnings, which have constrained budgets, as well as lethargic economic growth have pushed firms to become tightfisted, consultants said. According to Anandorup Ghose, partner at Deloitte India, many companies have turned even more cautious as total payroll cost increases are trending higher than revenue growth. Also, unlike in 2022 and 2023, when attrition was high, the demand for workforce now has plateaued, unless a candidate comes with special skills.
Who should expect a good hike?
Those who have upgraded skills in the latest AI-related technologies or advanced cybersecurity and data analytics profiles could see a raise of 1.6-2x of what their peers in other roles get. Banking hikes are expected to be a notch lower than last year. The IT, GCC and the startup sectors typically give out higher increments. But with attrition low, big hikes aren’t likely.
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If not good hikes, then what?
With the post-pandemic hiring mania easing, companies have moved away from recruiting at any cost to retaining top performers. Some startups are even offering exclusive credit cards to top talent. Bengaluru-based product innovation startup Thence offers variable pay along with employee stock ownership plans (Esops) and stock appreciation rights (SARs) to senior roles. Some firms also pay for short-term executive management degrees from leading B-schools in India and abroad to retain top performers.
Will low hikes drive up attrition levels?
Unlikely. The job market is stable—over the past couple of years, hiring across sectors has slowed. As a result, normal increments and salary jumps during job changes have moderated. In fact, the highest increment in the past seven to eight years was in 2022 when it averaged 10.6%, according to Aon. Firms may not be willing to make counteroffers, even if those leaving fall in the top talent bracket. Still, attrition at the junior levels will continue to plague companies as demand at lower pay grades remains high.
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