22nd Edition of Aon India’s Salary Increase Survey Projects 9.4% Average Increase for India Inc.

It Pays to Perform. Top Performers to get 15.4% Average Salary Increase

New Delhi, Tues 27 Feb 2018 – Aon, a leading global professional services firm providing a broad range of risk, retirement and health solutions, today released the 22^nd edition of its annual Salary Increase Survey in India. The study, the largest and the most comprehensive of its kind in India, analysed data across 1000+ companies from more than 20 industries.

As per the survey, companies in India gave an average pay increase of 9.3% during 2017 marking a departure from the double digit increments given by organizations since the inception of this study. The projections for 2018 are also expected to be similar at 9.4% highlighting increasing prudence and maturity being displayed by companies while finalising pay budgets.

The focus on performance is getting sharper year-on-year. A top performer is getting an average salary increase of 15.4%, approximately 1.9 times the pay increase for an average performer. Moreover, the bell curve is sharpening with a significant drop in the percentage of people in the highest rating. 

Anandorup Ghose, Partner at Aon India Consulting, commented, “Despite an improvement in macro-economic forecasts - salary increases remain at the same level as was projected in the last fiscal. With increasing maturity, HR budgets are being realigned towards top performers as opposed to the broader population.”

#	Industry	Proj Salary Increase (2018)	#	Industry	Proj Salary Increase (2018)
1	Professional Services	10.6	11	Engineering/ Manufacturing	9.2
2	Consumer Internet Companies	10.4	12	Metals	9.2
3	Life Sciences	10.3	13	Telecommunications Services[1]	9.1
4	Consumer Products	10.2	14	Entertainment/Publication/Communication	9.1
5	Automotive/ Vehicle Manufacturing	10.1	15	Hospitality/ Restaurants	9.0
6	Chemicals	9.6	16	Energy (Oil/Gas/Coal/Power)	9.0
7	ITeS	9.6	17	Transportation Services/Logistics	9.0
8	Retail	9.5	18	Engineering Services	8.9
9	Hi Tech/ Information Technology[2]	9.5	19	Financial Institutions	8.5
10	Real Estate/ Infrastructure	9.3	20	Cement	8.4

Sectors such as Professional Services, Consumer Internet Companies, Life Sciences, Automotive and Consumer Products continue to project a double digit salary increase for 2018. Consumer Internet Companies however, over the past 3 years have seen a significant drop of 250 basis points, from 12.9% to 10.4% projected for 2018. Interestingly, the Hi Tech/ Information Technology sector, which has gone through a spate of upheavals in recent times, is projecting an average hike of 9.5% in 2018, whereas the third party IT services which provide majority of the employment in India are projecting an average hike of 6.2%.

Over the years, with increasing pressure on compensation budgets, there is an emerging focus on rationalization of budgets. Companies are increasingly taking into account the base effect e.g., pay increases for top and senior management is consistently going down.

Anandorup Ghose commented, “Pay increases are becoming more nuanced. We are increasingly seeing a multitude of factors impacting salary increases such as size of the company, business dynamics within the sub industry, nature of talent requirements and quite obviously, performance.”

The attrition rate in India is seeing a continuous downward trend as the overall attrition has come down from an average of 20% in the previous decade to 15.9% in 2017.