Aon predicts an average pay increase of 9.4%


The average salary increment for top performers will be 15.4 per cent.

Last year, India Inc. gave an average pay hike of 9.3 per cent to its employees. The story isn’t any different this year. According to Aon’s annual Salary Increase Survey in India, the expected average salary increase will be 9.4 per cent.

However, companies are willing to reward the performers. The study predicts that a top performer will get an average salary increase of 15.4 per cent—approximately 1.9 times the pay increase for an average performer. Besides, the bell curve seems to be sharpening at the same time with a significant drop in the percentage of people in the highest rating.

While this prediction is for across industries, some sectors will continue to provide a better pay to its employees over others.

For instance, professional services, consumer Internet companies, life sciences, automotive and consumer products continue to project a salary increase of more than 10 per cent for 2018. Consumer Internet Companies, however, over the past three years have seen a significant drop of 250 basis points, from 12.9 per cent to 10.4 per cent projected for 2018.

In the IT sector, there are some hi-tech IT companies, which, despite a spate of upheavals in recent times, are projecting an average hike of 9.5 per cent in 2018. On the other hand, the third-party IT services, which provide the majority of the employment in India and include companies, such as TCS, Infosys and Wipro are projecting an average hike of 6.2 per cent.

The study states that companies are now trying to rationalise their compensation budgets in the
wake of ongoing economic uncertainty. In fact, businesses are increasingly taking into account the performance and salary budgets of key competitors to determine their own budgets.

That is why, they are increasingly taking into account the base effect, and as a result, the pay increases for top and senior management are consistently going down and companies are shifting from fixed pay to variable pay.

Anandorup Ghose, partner at Aon India Consulting, says, “Pay increases are becoming more nuanced. We are increasingly seeing a multitude of factors impacting salary increases, such as size of the company, business dynamics within the sub-industry, nature of talent requirements and quite obviously, performance.”

The attrition rate in India is seeing a continuous downward trend as the overall attrition has come down from an average of 20 per cent in the previous decade to 15.9 per cent in 2017.

The Aon study analysed data across 1000+ companies from more than 20 industries.

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