India-based cos can offer higher increments this year

It is nothing less than music to salaried ears. A survey by a professional services company Aon has stated that Indian companies are going to offer better salary hikes in 2024 that firms based outside the country would offer to their employees located in India. If that happens eventually, it would stretch a trend into its third year.

Aon, which is headquartered in London, surveyed more than 1,400 companies in 45 different sectors for the study. It has come out with a forecast that India-based companies, on average, would offer 9.6% salary hikes, while companies that have their headquarters abroad would settle for 9.3%. However, the rate of hike would be lower than that offered by firms in either basket. In both 2022 and 2023, employees of Indian companies, on average, got more than double-digit increments.

The report mentioned that till 2021 the increments handed out by both groups of companies were on par. On an average that year both baskets offered 9.3% increment.

The difference began showing up in 2022. That year India-based companies offered average hikes of 10.7% while companies located abroad came up with 10.5% to their employees in India. In 2023, the hikes were 10.1% and 9.6% for the two groups respectively.

“While we see a large number of organisations rolling out a hike of 9% this year, there is a variation visible this year between the salary increases in India-headquartered organisations vs those with headquarters based out of advanced economies like the US, UK, Japan, France and Germany,” Tarun Sharma, associate director, Talent Solutions at Aon, told The Economic Times.

He also explained to the newspaper that the difference in increments this year can be attributed to the fact that there are cost pressures and looming negative growth sentiment which have been given precedence over local talent dynamics.

Companies based in developed countries such as the UK and Japan have to battle recession in their domestic economies while the sentiment is positive in India which would record the highest rate of GDP growth in 2023-24 among all the major economies in the world.

Companies based in India are also wrestling with higher attrition rates compared with foreign firms that have businesses in India.

In February the Hindustan Times said in a report quoting Aon that employees in financial institutions, engineering, automotive and life sciences could receive the fattest salary hikes, while sectors such as technology consulting, retail and services could offer the lowest hikes.

It made a forecast that manufacturing companies would offer increments of about 10.1% this year followed by financial services and life sciences and financial services that can hand out 9.9% rise on average. Third in the rank could be global capability centers with a 9.8% hike.