In addition to e-commerce companies, information technology (IT), IT-enabled services, startups, and logy. You would notice a 150-200 basis point decline in predictions in these categories, “said partner Anandorup Ghose of Deloitte India. The biggest compensation increases over the last two years were seen in these industries.
“Given the impact of a global recession and the downturn, the industries that are oriented toward global markets, such as IT, financial services, and e-commerce, may have more muted increments compared to 2022, “Human capital solutions partner at Aon India, Roopank Chaudhary, said.
According to the Salary Increase Survey conducted by consulting firm Aon in September, Indian companies planned to raise pay by 10.4% in 2023, which would be almost identical to the 10.6% real increase this year. However, India Inc. must take into account attrition, which continues to plague businesses across all industries, and may not significantly modify budgets.
“Overall, attrition is still a problem in many industries. Companies will therefore be compelled to offer greater raises in order to keep employees, Chaudhary continued.
Despite the “downward market attitude,” WTW projects that the median income will be 10% lower than it was in 2022. In order to align pay with excellent company performance, consumer-facing companies will actually need to increase increments.
Cement, real estate, hospitality, and fast-moving consumer goods (FMCD, FMCG), which depend on domestic demand and consumption, could experience faster growth rates than expected, according to Aon.
“We anticipate modest improvement in service and consumer companies’ rises by 50-100 bps” (sectors that did not see moderate or low hikes over the last few years). Depending on the sub-sector, manufacturing is anticipated to remain generally stable with some slight swings.
Salary increases will also be influenced by declining WPI (wholesale pricing index) and CPI (consumer price index) inflation. Retail inflation decreased to an 11-month low of 5.88% in November from 6.77% in October as a result of falling global commodity prices and increased borrowing rates, while the WPI inflation rate dropped to its lowest level in 21 months, indicating lessening price pressures.
“Inflation levels have put a lot of pressure on pay rises around the world, and while most nations and businesses haven’t responded by raising pay at the same rate, this pressure was also predicted in India. If the trend persists, though, we might not have to worry about this when businesses consider reducing their raises,” Ghose remarked.
In industries like information technology, where salaries make up between 67% and 70% of costs, growing inflation is concerning. The wage cost as a share of revenue decreased at Tata Consultancy Services Ltd. and HCL Technologies Ltd., to 56.1% and 54.6%, respectively, according to the September quarter earnings data, while it remained stable at 53.2% at Infosys.
While this is going on, international corporations will have to make decisions based on a January-December calendar.According to the September quarter results statistics, the salary cost as a share of revenue declined at Tata Consultancy Services Ltd. and HCL Technologies Ltd., to 56.1% and 54.6%, respectively, while it remained constant at 53.2% at Infosys. International firms will have to make judgments based on a January-December calendar at this time.