Indian companies can increase salaries by an average of 9.1 percent this year. However, this is slightly lower than the projected growth of 9.3 percent by 2025. EY said in the report released on Monday, companies are emphasizing on skill-based pay structure and better performance. Companies are making these standards the basis for salary increase. According to the report, the highest salary increase of 10.4 percent is expected in Global Competence Centers (GCC) this year. The salary of employees working in the financial services sector may increase by about 10 percent. There will be a growth of 9.9 percent in e-commerce and 9.7 percent growth in life sciences and pharmaceuticals. The report says that 45-50 percent of Indian companies are emphasizing on skill-based salary structure. New technology roles like AI, generative AI, machine learning and engineering are seeing salary increases of up to 40 percent. The report also notes that the gap between high and average performance has widened. High performing employees are seeing a salary increase of about 120-150 percent and average performing employees are seeing a salary increase of 60-80 percent.
CEO salary increasing by 15 percent
The report says that in 2025, the average compensation of Chief Executive Officers (CEOs) in Nifty top-200 companies has increased to Rs 7-9 crore. This shows an increase of 12-15 percent on an annual basis. According to EY, out of this, fixed salary accounts for 25-30 percent of the total CEO compensation. Short-term incentives account for 25-30 per cent, while long-term incentives contribute 45-50 per cent. About 75 per cent of NSE-200 companies offer long-turn incentives, which have become a standard part of CEO compensation.
Drop in attrition rate
According to the report, the attrition rate has come down to 16.4 percent in 2025, which was 17.5 percent a year ago. This decline has come due to slackness in the labor market, where the risk taking ability of employees has reduced. 80 percent more employees are leaving the job voluntarily. Most of the attrition is employee and opportunity based, not due to restructuring. The financial services sector had the highest attrition rate at 24 per cent. Especially in sales, relationship management and digital roles. The attrition rate in professional services was 21.3 percent, while the attrition rate in the high-tech and IT sector was 20.5 percent. The attrition rate in the Global Competence Centers i.e. GCC was the lowest at 14.1 percent. The future of salary does not depend only on annual increments. Abhishek Sen, partner and leader of EY India, said, the future of salary in India now depends only on annual increments. Not determined by the size of the increment. Companies are now deciding which skills to invest in and which outcomes to encourage. Reward strategies are being made more thoughtfully, with better use of data for decision making.
