Indian firms set to hike salaries by 9.8% in 2024

Companies operating in the banking, financial services and insurance (BFSI) sector, retail and IT are expected to award employees salary increases of almost 10% in 2024.

According to WTW’s Salary Budget Planning Report, Indian companies anticipate granting pay hikes of up to 9.8% over the next 12 months. This puts India at the top of  the Asia Pacific region chart in terms of salary rises.

The report says the potential substantial salary increases, despite the global economic slowdown, represents a positive indicator for both the Indian economy and its workforce.

It identifies several factors that could account for this trend. It said: “Firstly, India’s status as a youthful and expanding economy, coupled with its substantial workforce, engenders intense competition for talent, thereby propelling salary increments.

“Secondly, a significant number of Indian firms operate within the technology and other fast-growing sectors, which tend to offer more substantial compensation packages.

“Lastly, the Indian government has implemented measures to foster business growth and job creation, contributing to economic advancement and a conducive backdrop for wage growth.”

The report said companies were revising their salary budgets for the coming year due to two key concerns: the tightening labour markets and escalating inflation.

Companies are finding themselves engaged in fierce competition to both attract and retain top talent. This heightened competition is resulting in increased salary offers, as companies are becoming more willing to pay premium wages for the best talent.

Regarding inflation, employees expect their salaries to keep pace with the spiralling cost of living. Consequently, employees are demanding higher salaries, compelling companies to respond by increasing salaries to a greater extent than they might have otherwise.

The report revealed that over half of the companies have expanded their salary budgets for the current year when compared with the figures from 2022, with a quarter of them surpassing the budget projections they had set in December 2022. “This indicates a growing willingness among companies to provide more substantial salary hikes, even in the midst of economic uncertainty,” it said.

 

Technology, financial and retail to pay more

The report said the technology, media, gaming, financial services and retail sectors are poised to pay the most substantial salary increases, approaching 10% . Several factors contribute to this projection:

• High talent demand: these industries are experiencing rapid growth, and as a result, they require a skilled workforce – driving up salaries.
• The competitive environment: companies within these sectors are engaged in intense competition to both attract and retain top-tier talent, intensifying the upward pressure on salaries.
• Emphasis on innovation: these sectors rely on innovation to remain competitive. To stay ahead they invest in their employees, which often translates into higher salaries.

 

Explaining the responses

The WTW Salary Budget Planning Report collates 32,000 responses from companies spanning 150 countries regarding their staffing projections. The report said “the substantial participation of 708 Indian companies in this survey holds significance”. It said: “It signals a keen awareness among Indian companies regarding the vital nature of salary budget planning, underlining their dedication to offering competitive compensation packages to their workforce.

“Furthermore, the survey’s revelation that Indian companies anticipate a 9.8 per cent salary increase in 2024, closely aligned with the 10 per cent increase observed in 2023, carries positive implications for Indian employees. This indicates that Indian firms are actively investing in their workforce, demonstrating their commitment to providing competitive salaries and financial well-being to their employees.”

In 2024, India is anticipated to lead the Asia Pacific region with the highest projected salary increases. Following closely are Vietnam at 8%, China at 6%, the Philippines at 5.7% and Thailand at 5%.

The report added: “Additionally, the revelation that nearly 28% of surveyed companies plan to recruit more staff within the next 12 months carries encouraging implications for Indian workers. It signals a forthcoming strong demand for talent, providing promising opportunities in the coming year.”