India Inc average salary hike to be 10.4% in 2023: Aon Survey

India Inc is expected to see double-digit salary increments in this calendar year but slightly lower than the last year, according to the 28^th annual salary increase survey for 2022-23 by Aon India. As per the study, the projected salary increase across employee groups in 2023 is 10.4%. In 2022, the overall salary increase of employee groups stood at 10.6%.

According to the survey, of the 1,400 companies that are being surveyed across the industry,  45% of firms will deliver a double-digit increase in salary, which is a significant jump from 32.5% in 2021. The proportion of companies projecting 14%+ increments in 2023 is the highest in the past decade.

Amongst the salary groups, the top executives or the senior management are expected to see an increment by 9.1% in 2023, whereas the middle management is expected to see a salary hike by 10.1%. The junior management is expected to see a hike in the salary by 10.8%. The clerical administration and manual workforce is expected to see an increment by 7.7% and 7.9%, respectively. Notably, the expected increment in salary across employee groups is lower than that of 2022. In 2022, the salary increment for top executives or senior management, middle management, junior management or professional or supervisor, clerical administration and manual workforce stood at 9.7%, 10.5%, 11.1%, 7.9% and 5.2%, respectively.

"India continues to project the highest salary increases among the fast-growing economies in 2023. In fact, we find that the 2022 actual salary increment number of 10.6% is higher than the projected number in February 2022. The industries that are projecting the highest salary increases are E-commerce, Professional Services, Hi-Tech/IT, Financial institutions, and IT-enabled Services," said Roopank Chaudhary, partner and chief operating officer, Human Capital solutions.

"2022 is also seeing a clustering of salary increases across industries – the recession phenomenon of large divergence has reduced as some of the worst pandemic[1]hit sectors are seeing a rebound recovery. This year we see some industries doling out extremely high salary increments, while the average double-digit increments of the bottom industries are also around the 9% mark," he added.

With an increase in salary increment, the industry is facing the challenge of the war of talent. According to the survey, the majority of the organisations see an offer decline rate between 10% to 30%. The sectors facing the highest impact of the war for talent are technology and professional services.

"The war for talent has been extremely critical in the Technology sector followed by the professional services sector. Conventional sectors such as automotive/vehicle manufacturing have also positioned itself on 4th amongst all sectors facing the highest offer declines. Although the Top 2 reasons for offer declines stay the same as FY2021, Candidate Experience, and Employer Brand have become more prevalent as reasons for dropping an offer at hand," the survey said.

The survey comes at a time when the industry, domestically and globally, is witnessing mass resignations and layoffs across sectors.

Earlier this month, TeamLease Edtech in its career outlook report said that as many as 62% of Indian companies have expressed the intention to hire more freshers between the January to June period of 2023. In the July to December period of 2022, the intent to hire freshers stood at 59%. Globally, the intent to hire freshers during the HY of 2023 stands at 14%, whereas in the APAC region, this intent stands at 23%.