Indian companies expect better business next year.
The salary hike in 2017 was the lowest in the last eight years. The reasons for this poor increment were the slowdown in the industry, shrinking overseas demand, current exchange rate, automation, technological disruptions, tightening regulations in foreign markets, and so on. But this trend is not likely to continue.
In 2018, there will be a marginal hike in salary as per Aon Hewitt’s India Salary Increase Survey. Indian companies expect that there will be better business in 2018, and their performance will increase, which will certainly have a positive impact on salary hike.
As per the survey, in the next appraisal season, there will be an average salary increase of 9.6 per cent, which was earlier 9.4 per cent, in the last appraisal season.
The professional services firms are expected to experience the highest pay hike of 10.7 per cent, followed by Life Sciences,10.6 per cent, and automotive/vehicle manufacturing, 10.4 per cent.
Interestingly, while the high-technology sector went through a rough patch in the recent months, the projected average hike in this sector is of 9.9 per cent, which was 9.7 percent in 2017. Last year, IT product companies saw an average hike of 10.4 per cent. The IT captives/IT-consulting sector witnessed an average hike of 8.9 per cent, while the third-party IT services companies simply gave an average hike of 5.8 per cent last year.
There is a sign of improvement in the local demand in the IT sector, which has led to the expected pay hike in 2018. Going further, business performance is likely to stabalise.
The study says that the consumer-product sector will see an average pay hike of 10.3 per cent, while the entertainment/communication and publications sector will witness an average hike of 10 per cent.
On the other hand, lowest projected salary hikes in 2018 are for the following sectors— hospitality/restaurant/travel (8.9 per cent), engineering design (8.8 per cent), banking/finance (8.6 per cent) and transportation/logistics/shipping service (8.6 per cent).
As per the survey findings, the key talent will be rewarded at a roughly 1.8x premium over the average, which was also the trend in 2017.
The top performers across companies continue to enjoy salary hikes year on year in line with the pay-for-performance agenda, but this is not the case for low performers.
The survey also found that maintaining competitiveness of pay continues to be a top reward challenge for firms because 71.9 per cent of the companies have reported no change in the salary increase budgets from that of 2017.