This is a slight dip from the 9.3% increase recorded in 2024 and a more noticeable slowdown compared to the 10.6% surge in 2022 during the post-pandemic recovery phase.
Despite Indian companies maintaining a stable EBITDA margin of 22% over the last four years, wage growth has moderated, particularly in sectors such as IT services.
The survey, which covers over 1,400 companies across 45 industries, highlights a reluctance in the private sector to reward employees despite rising profitability and productivity. This trend persists despite governmental nudges encouraging wage growth.
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Sectors such as manufacturing, automotive, and global capability centres (GCCs) are expected to lead salary increases in 2025. Engineering design services and automotive manufacturing are projected to offer the highest hikes, both budgeting for a 10.2% increase.
GCCs and the retail sector are also set to reward employees well, with estimated hikes of 9.7% and 9.8%, respectively. The financial sector remains strong, with non-banking financial companies (NBFCs) likely to offer a 10% pay rise.
Conversely, the IT services sector is expected to offer the lowest salary hikes at 7.2% in 2025, a reflection of the global slowdown in tech hiring and spending. Technology consulting and services, in general, are anticipated to see only a 7.7% increase, continuing the downward trend in salary growth within the industry.
Real estate salary hikes are expected to cool to 9.7% in 2025, down from 10.6% last year, while banking sector salaries may rise by 8.8% in 2025, according to the survey.
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Attrition rates have also declined, pointing to a stabilising labour market. The overall attrition rate fell to 17.7% in 2024 from a high of 18.3% in 2023 and a peak of 21.4% in 2022. This decline suggests that the hiring frenzy seen during the “Great Resignation” phase in 2022 has cooled, with a larger talent pool now available.
Roopank Chaudhary, Partner and Rewards Consulting Leader for Talent Solutions for India at Aon, said, “Despite external uncertainties, India’s economic prospects remain stable, with rural demand improving and private consumption maintaining momentum. The downward trend in projected salary increases could be in response to external factors like geopolitical and economic developments, the potential impact of U.S. trade policies, conflict in the Middle East, and the explosive pace of generative AI advancements.”
“Our data shows that moderation in salaries is an expected outcome given the margin pressures on companies. The sector-wise increment trends for 2025 reflect prudence and adaptability as companies balance market challenges and the need to attract and retain talent across sectors,” added Chaudhary.
The availability of talent is also stabilising, supported by increased labour force participation despite a rise in self-employment and entrepreneurial activity. Chaudhary added that this presents an opportune time for companies to focus on strategic workforce skilling, re-skilling, and institutional support.
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Amit Kumar Otwani, Associate Partner for Talent Solutions for India at Aon, said, “In a globally interconnected world, shifting governments, businesses, and workforce behaviours and expectations could impact the Indian economy and subsequently the local talent landscape. A comprehensive analysis of market behaviours, robust datasets, and advanced technology are essential to anticipate shifts and prepare accordingly,” said.
“Adopting a hands-on approach to total rewards and compensation practices and leveraging AI-driven innovation will enable India Inc. to achieve sustainable growth in an increasingly automated environment,” stated Otwani.
While salary growth is moderating, India’s 9.2% projected hike for 2025 remains among the highest globally. Industry experts believe that businesses are now balancing competitive pay with sustainable workforce strategies to achieve long-term growth in a rapidly evolving talent landscape.
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