In a noteworthy revelation, WTW’s Salary Budget Planning Report forecasts that Indian companies are gearing up to offer their employees a substantial salary increase of approximately 9.8 per cent in 2024.
This figure closely aligns with the 10 per cent rise observed in 2023, placing India at the forefront of the Asia Pacific region in terms of salary increments. This is undoubtedly great news for the Indian economy and its workforce, especially amid the backdrop of a global economic slowdown.
Exploring the Factors Behind Increased Budgets
Several factors contribute to this optimistic trend. First and foremost, India’s vibrant and expanding economy, combined with its large workforce, creates intense competition for talent. This competition is a driving force behind the upward trajectory of salaries.
Additionally, many Indian companies operate within fast-growing sectors, such as technology, which inherently offer more generous compensation packages. Moreover, the Indian government’s pro-business policies have fostered economic growth and job creation, creating a favourable environment for wage growth.
The report indicates that Indian companies are revising their salary increase budgets for the coming year due to two key concerns: tightening labour markets and escalating inflation.
Tightening labour markets have led to fierce competition for top talent. This competition has resulted in increased salary offers, as Indian companies are willing to pay premium wages to secure exceptional employees.
Simultaneously, the rising inflation rates are putting pressure on salary budgets. As the cost of living increases, employees naturally expect their salaries to keep pace. This has led to higher salary expectations, compelling companies to respond with more significant salary increases.
The report also revealed that over half of the surveyed Indian companies have expanded their salary budgets for the current year compared to 2022 figures, with a quarter of them surpassing their December 2022 budget projections. This showcases a growing willingness among companies to provide more substantial salary hikes, even in the midst of economic uncertainty.
Sectors to Watch
Looking ahead to 2024, the technology, media, gaming, financial services, and retail sectors are projected to offer the most substantial salary increases at around 10 per cent. Several factors underpin this projection:
- High talent demand: These industries are experiencing rapid growth and require a skilled workforce, driving the demand for talent and salaries upward.
- Competitive environment: Fierce competition within these sectors to attract and retain top-tier talent is intensifying the upward pressure on salaries.
- Emphasis on innovation: These sectors rely heavily on innovation, leading to higher compensation packages as companies invest in their employees to stay competitive.
Moreover, the slightly higher salary increases projected by companies in the BFSI, retail, and captives sectors for 2024 signify positive prospects. This reflects confidence in their future growth and underscores their commitment to investing in their workforce.
Rajul Mathur, Consulting Leader – Work and Rewards at WTW India, highlights, “Companies across industries are still closely monitoring their cost structures.”
Survey Insights
The WTW Salary Budget Planning Report is an extensive survey encompassing over 32,000 responses from companies across 150 countries, lending significant statistical validity to the survey results. Notably, the substantial participation of 708 Indian companies in the survey indicates their keen awareness of the importance of salary budget planning and their commitment to competitive compensation packages.
The survey’s revelation that Indian companies anticipate a 9.8 per cent salary increase in 2024, closely aligned with the 10 per cent increase observed in 2023, carries positive implications for Indian employees. It demonstrates Indian firms’ active investment in their workforce and their commitment to providing competitive salaries and financial well-being to their employees.
Positive Job Market Outlook in Indian Companies
The job market outlook for the upcoming 12 months appears optimistic. Various sectors are displaying a strong demand for talent, offering favourable prospects for job seekers.
Rajul Mathur adds, “Sectors like manufacturing, pharmaceuticals, media, gaming, and global captive centres are expanding.” Despite a slowdown in IT recruitment, mid-sized companies, product and platform firms, and the GCCs of financial services companies are expected to continue hiring.
In 2023, the voluntary attrition rate in India decreased to 14.6 per cent from 15.3 per cent in 2022, indicating increased job satisfaction among Indian employees and reduced turnover rates. This may be attributed to increased investments in employee growth and India’s growing economy, creating more job opportunities and enhancing job security.
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