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9.6% average salary increase for India Inc in 2024: EY Future of Pay 2024 report
The second edition of EY's 'Future of Pay 2024' report predicts that India Inc will witness an average salary increase of 9.6% in 2024, similar to last year. Overall attrition fell to 18.3% in 2023, and it is expected to gradually decline further as companies prioritize cost management and employee well-being.
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India Inc is set to see a 9.6% salary increase on average in 2024, similar to the actual increase last year, according to the second edition of EY ‘Future of Pay 2024’ report.
Overall attrition fell to 18.3% in 2023 (from 21.2% in 2022) and is set to gradually decline over the next few years as companies prioritise cost management and employee well-being, stabilising the workforce amid high talent demand, it said.
In light of India's position as a global hub for technology and outsourcing services, e-commerce is expected to have the highest salary growth of 10.4% this year, followed by financial services (10.1%), as per the projections in the EY report.
Professional services salaries are set to increase 10% in 2024, it said, suggesting a rebound as companies invest in strategy alignment to navigate global business complexities. The impact of real estate and infrastructure as an emerging sector is also visible, as increments continue to be stable at 10%.
As per the EY report, 35-40% of the technology workforce is made up of digital talent, a figure that is expected to become more crucial in the future. Among digital skills, super niche skills in domains such as artificial intelligence (AI), machine learning (ML) and blockchain are highly sought-after, commanding a premium of 30-50%, it said.
“While overall average salary increase in India Inc. holds steady compared to last year, certain sectors such as ecommerce, financial services and professional services firms are poised for significant pay raises in 2024. There is also a discernible trend towards embracing a more comprehensive rewards value proposition (RVP) to drive better ROI (return on investment) across all industries,” Abhishek Sen, partner, EY India, said in a statement. “Going forward, organisations will harness the transformative power of AI to craft bespoke benefits packages, optimise reward procedures and elevate overall employee satisfaction at the workplace."
Attrition across sectors
As per the report, attrition rates in India have been fluctuating, influenced by macroeconomic factors and internal corporate strategies. While overall attrition dropped to 18.3% in 2023, the highest levels of attrition prevailed in financial services (24.8%), professional services (24.2%) and information technology (23.3%).
This year, voluntary attrition has decreased slightly, while involuntary attrition has gone up, particularly among global companies, indicating layoffs in the IT and startup sectors due to global economic changes. Indian companies, however, showed resilience and performed better, experiencing less impact from economic shifts.
Trends in Total Rewards
The report said 80% of the organisations emphasised the importance of “pay and benefits” and a need to move away from traditional employee benefits in the modern workforce. Top three areas of focus for employers are benefits cost planning (43%), employee wellness (29%), evaluating and aligning with industry standards (20%), it said.
At 43%, variable pay plan (non-sales) is the most common type of incentive plan offered by organisations, followed by discretionary incentives (32%) and sales incentive plan (21%).
In terms of job levels, executives (CXOs) get the highest variable pay, but their projected salary increases for 2024 are lower than those in 2023, according to the report. Most employee levels are experiencing decreased variable pay percentages for 2024, except for the lowest-paid tiers, which might see a slight uptick. On average, organisations distributed variable bonuses equivalent to 15.05% of employees' annual fixed cash in 2023, as per the report.
Overall attrition fell to 18.3% in 2023 (from 21.2% in 2022) and is set to gradually decline over the next few years as companies prioritise cost management and employee well-being, stabilising the workforce amid high talent demand, it said.
In light of India's position as a global hub for technology and outsourcing services, e-commerce is expected to have the highest salary growth of 10.4% this year, followed by financial services (10.1%), as per the projections in the EY report.
Professional services salaries are set to increase 10% in 2024, it said, suggesting a rebound as companies invest in strategy alignment to navigate global business complexities. The impact of real estate and infrastructure as an emerging sector is also visible, as increments continue to be stable at 10%.
As per the EY report, 35-40% of the technology workforce is made up of digital talent, a figure that is expected to become more crucial in the future. Among digital skills, super niche skills in domains such as artificial intelligence (AI), machine learning (ML) and blockchain are highly sought-after, commanding a premium of 30-50%, it said.
“While overall average salary increase in India Inc. holds steady compared to last year, certain sectors such as ecommerce, financial services and professional services firms are poised for significant pay raises in 2024. There is also a discernible trend towards embracing a more comprehensive rewards value proposition (RVP) to drive better ROI (return on investment) across all industries,” Abhishek Sen, partner, EY India, said in a statement. “Going forward, organisations will harness the transformative power of AI to craft bespoke benefits packages, optimise reward procedures and elevate overall employee satisfaction at the workplace."
Attrition across sectors
As per the report, attrition rates in India have been fluctuating, influenced by macroeconomic factors and internal corporate strategies. While overall attrition dropped to 18.3% in 2023, the highest levels of attrition prevailed in financial services (24.8%), professional services (24.2%) and information technology (23.3%).
This year, voluntary attrition has decreased slightly, while involuntary attrition has gone up, particularly among global companies, indicating layoffs in the IT and startup sectors due to global economic changes. Indian companies, however, showed resilience and performed better, experiencing less impact from economic shifts.
Trends in Total Rewards
The report said 80% of the organisations emphasised the importance of “pay and benefits” and a need to move away from traditional employee benefits in the modern workforce. Top three areas of focus for employers are benefits cost planning (43%), employee wellness (29%), evaluating and aligning with industry standards (20%), it said.
At 43%, variable pay plan (non-sales) is the most common type of incentive plan offered by organisations, followed by discretionary incentives (32%) and sales incentive plan (21%).
In terms of job levels, executives (CXOs) get the highest variable pay, but their projected salary increases for 2024 are lower than those in 2023, according to the report. Most employee levels are experiencing decreased variable pay percentages for 2024, except for the lowest-paid tiers, which might see a slight uptick. On average, organisations distributed variable bonuses equivalent to 15.05% of employees' annual fixed cash in 2023, as per the report.
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