India Inc. Likely to Revert to Pre-Pandemic Salary Hikes

A resurgent economy and increasing consumer confidence are likely to lift corporate India’s average increments for 2022 to the pre-pandemic level of 8.6% according to early estimates from Deloitte’s Workforce and Increments Trends Survey.

The information technology (IT) sector is likely to offer the highest increments of 10% in 2022, followed by the life sciences sector at 9.3%. It is the only sector expected to extend double-digit hikes with some digital/ ecommerce companies planning to give some of the highest increments, said the survey.

The IT-enabled services (ITES) sector is projected to give hikes of 9%, followed by consumer products (8.7%), manufacturing (8.4%) and financial services (8.3%). The services sector is expected to dole out the lowest increase of 7.5% in 2022, having done so last year as well at 6.6%.

About a fourth of the companies surveyed projected a double-digit increment for 2022, though operating in an environment in which Covid-related uncertainty persists is making it harder for them to make forecasts.

“Projection may improve further from here on, but a lot depends on how the situation develops in the next few months,” Deloitte Touche Tohmatsu India.

“Some of the survey respondents have just closed their 2021 increment cycle, so 2022 increments are a fair distance away for them,” said Anandorup Ghose, partner, Deloitte Touche Tohmatsu India. “GDP forecasts for FY22 were revised down after the second wave and we expect organisations to closely watch similar developments while managing their fixed cost increases next years.”

According to the survey findings, 92% companies gave an increment in 2021 at an average of 8%, compared with only 4.4% in 2020, where just 60% companies had extended a pay hike.

About 12% of employees were promoted in 2021 compared with promoted in 2021 compared with 10% in 2020. Almost 12% companies have updated their bonus or variable pay plans to align their reward structures with changing priorities. On the hiring front, 78% companies stated that they have started recruiting at the same pace as they used to prior to the Covid-19 outbreak.

“Going forward, function-specific increment differentiation may become more prevalent as attrition rates vary significantly across different skills,’ Gupta said. “Compensation is usually one of the top reasons for attrition, particularly at a junior management level.”

“Top factors behind attrition tend to be career growth, compensation, higher education, etc.” said Ghosh. “In our most recent exercise, we found compensation as the main reason for attrition featuring as 2.5x the next highest (career growth). This is a clear departure from the norm.”    

As far as getting back to the office is concerned, only 25% of the companies have conducted an employee preference survey to decide on return-to-work strategy. The IT sector has been the most proactive in seeking the views of staff. However, at an all-India level, only 40% of organisations have finalized the return-to-work strategy. Almost 90% said that they are likely to finalize a hybrid model in the future.

The 2021 Workforce and Increment Trends survey was launched I July 2021 as a B2B India-specific survey and covers more than 450organisation across seven sectors and 24 sub-sectors.S-ET

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *