A recent report by EY has said that India Inc may offer an average salary hike of 9.6 per cent in 2024, just as in 2023. The report, ‘Future of Pay 2024’, highlighted that e-commerce is expected to have the highest salary growth in 2024, at 10.9 per cent, followed by financial services with a projected growth of 10.1 per cent.
It further noted that overall attrition dropped 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 wellbeing, stabilising the workforce amidst high talent demand.
The report further stated that professional services’ salary will grow by 10% in 2024, 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%.
Abhishek Sen, Partner and Leader, Total Rewards, HR Technology and Learning, People Advisory Services, EY India 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 raise in 2024. There is also a discernible trend towards embracing a more comprehensive Rewards Value Proposition (RVP) to drive better ROI across all industries. Going forward, organisations will harness the transformative power of AI to craft bespoke benefits packages, optimise reward procedures, and elevate overall employee satisfaction at workplace.”
It further noted that around 35%- 40% of the technology workforce is made up of digital talent, a figure that is expected to become more crucial in the future. Amongst digital skills, super niche skills like Artificial Intelligence (AI), Machine Learning (ML) and Blockchain skills are highly sought-after, commanding a premium in the range of 30%-50%.
Key findings
1. Attrition trends
As per the report, attrition rates in India have been fluctuating, influenced by macroeconomic factors and internal corporate strategies. Overall attrition dropped to 18.3% in 2023, from 21.2% in 2022. The highest levels of attrition in 2023 prevailed across financial services (24.8%), professional services (24.2%) and information technology (23.3%).
This year, voluntary attrition decreased slightly, while involuntary attrition rose, 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.
2. Trends in Total Rewards
About 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%). At 43%, variable pay plan (non-sales) are the most common type of incentives plans offered in the organization, followed by discretionary incentives (32%) and sales incentive plan (21%).
The report reveals that in terms of job levels, Executives (CXOs) typically get the most variable pay, but their projected salary increases for 2024 are lower than those in 2023. Most employee levels are experiencing decreased variable pay percentages for 2024, except for the lowest-paid tiers, which might see a slight uptick. On an average, organizations distributed variable bonuses equivalent to 15.05% of employees’ annual fixed cash in 2023.
3. LTIPs are becoming increasingly diverse, flexible
The report highlighted that organisations have been creatively revamping their long-term incentive plans (LTIPs) in recent years. Shifting from cash rewards to stock incentives, around 26% of companies focussed on LTIPs for performance rewards in FY23. There is also a marked increase in penetration of this rewards component across non CXO cadres fuelled largely by the booming new age digital enterprise growth in India.
4. Top talent trends
Hybrid work cultures is gaining importance as it helps enhance work-life balance, productivity, and satisfaction. Unique hiring trends are observed in various sectors, like formation of ESG teams in financial services sector. There is an increasing trend towards ESG reporting among Indian companies with 60% firms already utilizing or on their way to utilise ESG policies.
AI and automated reward systems are personalising rewards and streamlining the rewarding process, reducing manual work. Going forward, companies are poised to utilize AI algorithms to customize benefits and improve employee satisfaction.
