Employees may be in for an even bigger disappointment this year as the economy and the market grapple with uncertainty. Companies are not only offering slimmer hikes but will also elevate fewer people.
Consulting firm Deloitte estimates a 25% drop in the number of promotions in 2025 versus last year.
“The current financial year has seen slower growth for companies across sectors and promotions have been impacted to manage fixed cost increases,” said Anandorup Ghose, partner at consulting firm Deloitte India and who tracks and advises corporates on compensation and rewards. “Slower market conditions also lead to organizations not needing to promote people for bigger roles, etc.”
A Mint analysis of 3,577 BSE-listed companies showed the revenue growth in Q3FY25 dipping to 4.4% from 7.3% and 9.1% in previous two quarters, respectively. Net profits surged 12.4%, up from 8.7% in Q2, but on account of lower input costs and disciplined cost management. Employee expenses remain steady.
Also read | Infosys resorted to this tried-and-tested hack to stem its top-level exodus: Promotions
Slowing corporate top line growth coincides with a bout of uncertainty unleashed by US President Donald Trump’s proposed reciprocal tariffs, which are likely to affect multiple sectors. That has turned companies even more cautious.
“Our promotions will go down by 15%,” said the HR head of one of the private lenders. “We rolled out quarterly promotions to 20% of eligible employees throughout the fiscal and had we not done that, the annual hit would have been more.”
The drop in promotions will be an added setback since salary raises too are estimated to be slimmer. Consulting firm Aon estimates that salaries across industries will rise an average 9.2% in 2025, a marginal decline from the average increase of 9.3% in 2024. Mercer’s Annual Total Remuneration Survey predicts a 9.4% overall salary increase across industries in India this year versus 10% last year. Meanwhile, Deloitte India Talent Outlook 2025 forecasts an 8.8% hike compared with 9.0% in 2024.
Back to the bell curve
Promotions are one of the main ways to retain employees. But this year, even the bell curve—where performance is plotted on whether employees met, exceeded or did not meet expectations —will get more rigid. Deloitte expects the number of those categorized as ‘below meets expectations’ to rise more than 25% over last year.
“More companies are adopting the bell curve, up from 67% in 2024 to 72% in 2025, indicating the need to rationalize performance to manage lower increment budgets,” Ghose of Deloitte said. “Even organisations that do not have a bell curve have implemented some rating mechanisms to drive performance orientation.”
Read this | It’s going to get harder to swing a promotion
The president of human resources at a conglomerate with business interests across energy, IT and securities sectors estimates that about 10% of the workforce eligible for promotions will get higher designations versus 15% last year. “There is no fight over talent supply and the market sentiment is down,” the executive said. “Large-scale promotions are out of budget for many firms.”
Meanwhile, Trump’s reciprocal tariffs are also expected to hit textiles, pharmaceuticals and agricultural products sectors that have exposure to the US market. “These are worrying trends and firms that are expected to do well, like the renewable energy sector, will take time to reap the benefits of their investments,” said the HR head cited above.
While the IT and IT-enabled services sector is relatively better placed on hikes and promotions, the HR head of a mid-tier IT firm warned that many of the promotions rolled out are “titular” to retain employees and may not come with a pay hike.
Still, a few companies may not cut down on promotions. Praveen Purohit, deputy chief human resources officer at Vedanta Group, told Mint that 15% of the eligible workforce will get promotions, a similar percentage as last year.
And read | To retain talent, Wipro doles out record number of promotions
