India Inc's salary hikes to dip to 8.8% in 2025, lowest in a decade: Deloitte India

Indian companies are navigating global and local headwinds, with the average increment projected at 8.8% in 2025, down from 9.0% in 2024, the lowest in a decade (excluding 2020-2021), according to a Deloitte India report. The survey shows 75% of companies will reduce or maintain pay increases. Most sectors expect stable or slightly lower increments, with the consumer products sector projecting a significantly lower budget.

Top performers can expect 1.7x higher increments than average performers, moderately lower than last year, says the report. Individual contributors and junior management can expect 1.3x higher increments than top management. While a third of companies expect fewer promotions, the overall promotion rate is projected to remain 12%. Additionally, most companies do not plan to increase promotion-linked pay hikes, the report adds.

Attrition in 2024 moderated to 17.4%. Nearly 80% of companies say they plan to increase headcount in the coming year. “In an environment of muted revenue growth, compensation budgets are under pressure. Controlled attrition and moderate inflation help optimise pay increases without affecting talent outcomes,” said Prakhar Tripathi, Partner, Deloitte India.

Many companies say they are adopting a data-driven approach to workforce upskilling but 50% lack a structured competency framework. Challenges include balancing business priorities with training, assessing skill gaps, and integrating technology. Companies report enhanced data-driven decision-making in HR, though challenges remain in integrating HR systems, managing costs, and employee adoption.

Hiring Trends

Despite modest projected salary growth, four in five companies plan to increase their headcount in 2025, says the Deloitte report. Furthermore, the percentage of organisations planning to reduce headcount has declined by 50 percent since 2024, signalling cautious optimism from India Inc. "About 89 percent of organisations in financial services, 88 percent in manufacturing and 82 percent in the consumer products sectors plan to increase headcount," says the report.

The Deloitte report comes days after global professional services firm Aon said salaries in India are set to rise by 9.2% in 2025, a slight decline from the increase of 9.3% in 2024, amid global uncertainty and softening growth. The study, which analysed data from over 1,400 companies across 45 industries, said there has been a trend of declining salary increments since 2022 when companies provided 10.6% salary increases influenced by the Great Resignation.