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Indian companies are expected to dole out an average salary hike of 10.3% this year according to estimates released by a global HR consulting firm on Wednesday. This will be lowest hike post the financial crisis of 2008-09.
The study conducted by Aon Hewitt shows a wide variance of salary increases across sectors. so while the financial services, technology, and outsourcing sectors have seen the greatest volatility and remain cautious this year the consumer & industrial sectors which so far have been resilient, also reported conservative increase projections. Last year Indian companies had given an average hike of around 11% amid tough economic conditions like rising prices and slowing growth.
"In sync with the economic outlook, of a 5% growth, an increase of 10.3% is among the lowest the country has seen in a decade (barring the subprime crisis year). Though business sentiment is strengthening on account of inflation reaching a three year low and stock markets rising upwards, the cautious streak is evident in the projected salary increase numbers," said Sandeep Chaudhary, Partner - Talent & Rewards at Aon Hewitt India.
In recent years there is a shift in the way increments are managed in organizations as salary budgets have shrunk and organisations are creating sharp differentiation in salary increases between their key talent and the rest of the employees.
Over the years this gap is widening. This year, key talent is projected to get an average increase of 14.1%.
"Cost consciousness and performance orientation are the key themes this year. Organizations are looking at compensation and productivity together and hence closely evaluating the return on compensation spent," Chaudhary added.
Despite a year in which India's growth came to a decade low, corporate India reported an average overall attrition of 19.3% for 2012. With a growing recognition that key talent is a sustainable competitive advantage, organisations are reshaping their strategies to safeguard this talent group. This is also reflected in the lower average attrition number for key talent at 5.7%. (Times of India)
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