Most hikes in engineering, finance

Some sectors are expected to witness substantial salary increases, with engineering, manufacturing, and retail likely to see a 10 per cent rise in wages. This trend reflects the increasing demand for skilled talent in these fields.

Financial institutions also expect a strong increase of 9.9 per cent, highlighting the importance of retaining key talent in a competitive market. GCCs and technology platforms forecast salary hikes of 9.9 per cent and 9.3 per cent, respectively, indicating optimism despite the tech sector’s earlier caution in 2024.

Modest hikes in tech consulting

Meanwhile, technology consulting and services are expected to see modest salary growth at 8.1 per cent. This slow increase reflects a conservative approach in some areas of the tech industry compared to the engineering and manufacturing sectors, which continue to invest heavily in talent.

Commenting on the survey, Roopank Chaudhary, Aon’s partner and head of reward solutions in India, said, “Despite evolving global economic challenges, our study indicates a positive business outlook across several sectors in India. This sentiment continues in many of the domestically driven sectors illustrated by the projected increments in the manufacturing, life sciences and retail industries.”

Decline in attrition rates in India

A key takeaway from the survey is the decline in attrition rates across India, which fell to 16.9 per cent in 2024 from 18.7 per cent in 2023 and 21.4 per cent in 2022. This decrease offers businesses the chance to focus on internal growth and development, reducing reliance on expensive external hires. For example, firms in industries like financial services and professional services, where attrition has been particularly high, will benefit from internal talent cultivation and enhanced employee retention efforts.

Tarun Sharma, associate director for Talent Solutions in India for Aon said, “The softening in attrition provides businesses a unique opportunity to focus on internal growth, capability building and driving long-term productivity. By cultivating and developing talent internally, firms can reduce the necessity for higher costs associated with new hires while simultaneously enhancing their organisation’s employee value proposition.”

Sector-wise highlights

1. Engineering and manufacturing: This sector is projected to lead salary increases, with a 10 per cent hike in 2025, up from 9.9 per cent in 2024. Attrition in the sector is also lower than average at 12.2 per cent, showcasing relatively higher retention.

2. Financial institutions: Salaries in this sector are expected to rise by 9.9 per cent, with attrition at a high 27.3 per cent, signalling the continued challenge of retaining employees in this industry. Financial institutions, facing high turnover, are expected to increase compensation to manage talent shortages.

3. Technology sector: The technology industry has seen slower growth in salary increases. The tech consulting and services sector in particular projects just an 8.1 per cent increase, while technology platforms and products are more optimistic, expecting a 9.3 per cent increase.

4. Professional services: This sector, facing 22.1 per cent attrition in 2024, plans a salary increase of 9.7 per cent. The high turnover indicates that firms need to focus on employee engagement and offering competitive compensation to reduce attrition.

5. Fast-moving consumer goods (FMCG): FMCG companies are expected to keep salary increases at 9.5 per cent, with attrition rates stabilising at 15.5 per cent.

Overall, India’s projected salary growth for 2025 positions the country as a leader in wage increases among major global economies. While attrition continues to pose a challenge, the decline in turnover rates points to a more stable workforce.

First Published: Oct 03 2024 | 1:16 PM IST