Top performers are likely to be handsomely rewarded—in some cases getting raises double that of their peers—in an appraisal season that will see overall increment lower than last year’s, according to a report by consulting firm Aon.
“Top performers in IT product firms are expected to get a 1.9x hike versus 1.73x that differentiated him/her from his/her peers in 2024,” said Roopank Chaudhary, partner for human capital solutions at Aon, adding that key talent in consumer and life sciences will get 1.76x and 1.67x raise, respectively.
“The consumer sector is expected to see one of the lowest hikes in four years at 9.1%. But its top talent is always in demand from other sectors like e-commerce, technology and life sciences,” pointed out Chaudhary, explaining the performance differential.
The consulting firm estimates that salaries across industries will rise by 9.2% in 2025, a marginal decline from the actual 9.3% hike rolled out on an average in 2024. Aon pegs it on “global uncertainty and softening growth”. Interestingly, the firm had projected 9.5% hike for the year gone by.
Another estimate, from Mercer’s Annual Total Remuneration Survey, predicts 9.4% overall salary increase across industries in India for 2025 versus estimate of 10% last year.
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For some sectors, a generous hike is critical to retain their best even as attrition slows on the back of a lethargic job market. This is good news for top performers as their employers will stretch to retain them.
Mint in its 7 February edition had written how pay hikes would fall below the 2024 numbers. Slowing corporate earnings, which have led to constrained budgets, as well as sluggish economic growth have pushed firms to become even more tightfisted than last time. “This indicates a trend of declining salary increments since 2022 when companies provided 10.6% salary increases influenced by the Great Resignation,” Aon noted.
Industry-wise raises
Aon, which studied the data from more than 1,400 companies across 45 industries, highlighted that salary increments are also projected to vary across industries.
Engineering design services (10.2%) and auto/vehicle manufacturing (10.2%) are budgeting for the highest salary increases followed by nonbanking financial companies (10%), retail (9.8%), global capability centres (9.7%) and life sciences (9.5%).
But professional services, which rolled out a hike of 8.9% in 2024, is expected to give 9.5% this year. Banking employees may be in for a disappointment as well since estimated hike is 8.8% versus a real one of 9.1% in 2024.
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The study also reveals that overall attrition rates declined to 17.7% in 2024 from a high of 18.7% in 2023 and 21.4% in 2022, indicating the availability of a larger talent pool post the Great Resignation. The years 2021 and 2022 saw corporates guzzle talent right after muted growth during the pandemic. Employees held multiple job offers, and that period is called the Great Resignation.
The financial services sector, where a major chunk of one’s compensation is linked to variable pay received, also placated its key employees well in 2024. Aon’s Chaudhary said top talent took home a payout of 1.83x of their peers.
Mint wrote last December that India’s dealmakers may win record bonuses for 2024, after fetching the decade’s highest fee income driven by share sales, mergers and debt funding rounds.
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According to Native, a search firm that also works with the financial services sector, bonuses may cross ₹1,000 crore in 2024, of which ₹700 crore may go to more than 350 top executives. These include managing directors, partners and directors at global and domestic investment banks earning an average fixed salary of ₹1.5-2.5 crore.
