India Inc's salary hike expected to rise to 9.5% in 2025

Salaries across industries in India are expected to see a slight increase at 9.5% in 2025 as compared to a 9.3% increase in 2024, according to the latest annual salary increase and turnover survey 2024-25 by global professional services firm Aon Plc.

The engineering, manufacturing and retail industries project double-digit increases at 10%, closely followed by financial institutions at 9.9%, indicating the strategic importance employers place on talent in these sectors in the current economic landscape, the report says.

Although the year 2024 started on a cautious note for the technology sector, the sentiment seems optimistic as we enter 2025. Global capability centres and technology products and platforms expect a more optimistic salary increase at 9.9% and 9.3%, respectively, up from last year, while the technology consulting and services projected increments at a lower end of 8.1%.

Financial institutions could see a slight increase to a 9.9% salary hike from 9.8% last year. The life sciences industry could see a projected salary hike of 9.8%, up from 9.7% in 2024. In FMCG or FMCD sectors, the salary hike could remain the same at 9.5% as last year, the report says.

Roopank Chaudhary, partner and head of reward solutions in India for Aon, says despite evolving global economic challenges, the Aon 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."

Chaudhary suggests organisations committed to retaining talent in a competitive job market must keep abreast of changing market data and understand the rapidly evolving compensation trends. "Having a holistic rewards strategy based on data and analytics will ensure organisations attract and retain the right talent and continue to build a resilient workforce.”

Looking at the attrition analysis, a downward trend is apparent with attrition reported at 16.9% on average this year, compared to 18.7% reported in 2023 and 21.4% reported in 2022. In 2024, financial institutions saw the highest attrition rate of 27.3%, followed by professional services at 22.1% and technology consulting and services at 19.1%.

Tarun Sharma, associate director for Talent Solutions in India for Aon says 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.”

Phase one of the study shares the current year’s actual increase and gives an early indication of the salary increase to be expected in 2025. Phase two of the study will include data collected in December and January and will be published in early 2025.