Companies in India will hand out a 10% median salary hike in 2023, according to global advisory firm Willis Towers Watson (WTW’s) salary budget planning report. The report said this will translate to an average salary increase of 9.8% compared with the actual 9.5% increase in 2022.
Financial services, banking and technology, media and gaming sectors are expected to see the highest salary increases at 10.4%, 10.2% and 10%, respectively.
At 10%, salary increases in India will continue to be the highest in the Asia-Pacific (APAC) region, WTW said. It said that China is projected to see an increase of 6%, while Hong Kong and Singapore will see a rise of 4% each next year.
According to the report, more than half (58%) of the employers in India have budgeted for higher salary increases this year compared to last year, while a quarter of them (24.4%) have made no change in the budget. Only 5.4% have reduced the budget compared to 2022.
The WTW report said that approximately 42% of companies in India have also projected a positive business revenue outlook for the next 12 months, while only 7.2% have projected a negative outlook.
In addition, the survey has found that information technology (65.5%), engineering (52.9%), sales (35.4%), technically skilled trades (32.5%) and finance (17.5%) will be the most sought-after functions for recruitment in the next 12 months.
Voluntary attrition rates in India continue to be among the highest in the region at 15.1%, only second to Hong Kong, the report added.
“2022 saw actual salary increments being higher than budgets and this was largely due to better-than-expected business performance and the need to retain talent. Despite the economic headwinds, higher projections for 2023 reflect cautious business optimism and a continued tight labour market,” Rajul Mathur, consulting leader India, work and rewards, WTW, said with regard to the findings of the report.
“We saw significant salary increases across sectors in 2022 and a similar trajectory is expected in 2023. With increased focus on technology-enabled growth, the demand for digital skills is driving pay increases for tech talent, especially in the technology, media and gaming, banking and financial services sectors,” Mathur added.
A better-than-expected business performance has also resulted in higher variable pay-outs in 2022 across career bands. Companies are allocating more variable pay budgets to above average and top performers, the report noted.