Techies in India may get 10% salary hike in 2023 even as layoff fears loom, finds survey

Indian employees may get a salary hike of about 10.3 percent on average in 2023, slightly lower than 10.6 percent the previous year, a survey by Aon India revealed on February 23. Forty-six percent of the 1,400 companies surveyed are expected to give a double-digit salary increase to their workforce this year.

Despite the looming fear of layoffs, especially in the tech sector given the recession fears and global macro challenges at hand, the survey predicts staffers in the e-commerce, tech consulting and services sector to get the maximum salary raise. At the same time, the sector witnessed the highest attrition rates in 2022 at 21.4 percent, per the report.

It said the attrition numbers remain near two-decade highs and there was an increase in involuntary attrition on account of recent layoffs.

Reflecting on attrition, Roopank Chaudhary, Partner, Human Capital Solutions, India at Aon noted, “The great resignation has been followed by the trend of quiet quitting. A considerable proportion of employees are disengaged. Organisations are therefore facing a challenge in not only retaining talent but also driving productivity from existing employees.”

Aon survey suggests that the least amount of salary increases will be seen in industries that are still grappling with the after-effects of COVID-19, like hospitality, restaurants, the cement industry and vehicle manufacturers.

The survey also points out that while the merit increase projections stays steady at 7.8 percent, the non-merit salary increase projections is expected to moderate to 2.8 percent. Non-merit increase involves promotions, market corrections and other adjustments. This is particularly noteworthy at junior levels where the non-merit increase projections are expected to be as high as 3.3 percent.

Pritish Gandhi, director and leader of the Executive Compensation and Governance Practice in India at Aon, said, “The non-merit salary increase projections continue to be moving up as firms budget for retaining talent through promotions and off-cycle corrections. As companies look to differentiate and optimise their talent spend, employers are investing more in critical talent in key roles.

He suggests that while it is important for businesses to define and adapt pay increases for both merit and non-merit factors, organizations must take a strategic approach to total rewards to build a resilient workforce and shape their strategies towards long-term drivers of pay and performance.

Aon analysed data across 1,400 companies and 40 industries for its 2023 salary projections.