Indian employees to receive a hike of over 10% in 2023: Report

Representative image

The average salaries in India are expected to increase by 10.2 percent in 2023, which is slightly lower than the actual increase of 10.4 percent in FY'22 but still in double digits, according to a report. The projected salary increases for 2023 are lower than the actual increases for 2022 across all job levels, except for blue-collar workers, who are expected to receive a slightly larger decrease in compensation in 2023.

The top three sectors with the highest forecasted salary increases are related to technology. E-commerce is expected to have the highest salary growth at 12.5 percent, followed by professional services at 11.9 percent and information technology at 10.8 percent, as per a survey titled "Future of Pay" by EY.

The average variable payout as a percentage of total compensation was 15.6 percent in 2022 in comparison to 14 percent in 2021. Financial institutions had the highest overall variable pay-out percentage of 25.5 percent, indicating a higher emphasis on performance-based incentives. Whereas the telecommunications industry had an overall variable pay-out percentage of 13.7 percent, relatively lower compared to other sectors.

AI, ML and Cloud computing skills in high demand

Some of the most promising emerging sectors for jobs in India in 2023 include renewable energy, e-commerce, digital services, healthcare, telecommunications, educational services, retail and logistics and financial technology. These sectors are anticipated to keep growing and provide a wide range of employment options for qualified employees.

ALSO READ | Is a PhD still relevant when companies prefer a skill-first approach?

Further, key skills and roles continue to be in demand across sectors and command premium in the market. Technology skills such as those in AI, ML and Cloud computing are in high demand and command a premium of 15 percent to 20 percent over basic software engineering compensation levels. Analytical skills like risk modelling, data architecture, and business analytics command a premium of 20 percent to 25 percent.

48 percent of organizations offer a premium for the skills which are high in demand. The average premium is of up to 1.9 times for skills which are high in demand as compared to basic skills. Moreover, pay hikes offered to average vs high-performing talent operate at a ratio of 1:1.8 as an average across sectors.

“As the Indian economy continues to grow, competition for top talent is intensifying across various industries. Top talent with critical skills and high-performance history command compensation premiums ranging from 1.7 to 2X of average talent,” said Abhishek Sen, Partner & Total Rewards Practice Leader, Workforce Advisory Services, EY India.

Future outlook for rewards

Companies are moving away from giving disproportionate salary hikes and are instead focusing on promoting healthy ways of working. Nearly 75 percent of organizations have wellness programs.

ALSO READ | Will SVB collapse impact the Indian talent market?

As companies seek to attract and retain top talent, they would incline towards rewards such as equity-based long-term incentives, customised benefits packages such as student loan repayment assistance, pet insurance, elder care support, employee assistance programs, flexible work and more.