India Increment Outlook 2025: 8.8% Expected - Deloitte

Mumbai, Mar 7 (PTI) As Indian companies are focused on optimising compensation cost budgets while navigating global and local headwinds, the average increment is expected to be at 8.8 per cent in 2025, Deloitte India said in a report on Friday.

Pay increases for 2025 are forecast at 8.8 per cent (compared with 9.0 per cent in 2024), Deloitte India's report - 'Deloitte India Talent Outlook 2025' - said, adding that 75 per cent of companies will either reduce or keep their pay increases the same as last year.

Further, the report revealed that while most sectors will keep the increment growth stable or moderately lower than the previous year, the consumer products sector expects a significantly lower increment budget.

"In an environment where companies are witnessing muted revenue growth, compensation budgets are naturally coming under pressure. Controlled attrition and moderate inflation are helping companies optimise pay increases without adversely affecting talent outcomes. However, we expect the focus on performance and talent differentiation to remain core to the HR strategies, regardless of other considerations," Deloitte India Partner Prakhar Tripathi said.

Deloitte India Talent Outlook 2025 report is based on a survey among decision-makers from over 500 companies across seven sectors.

The report further revealed that while organisations continue to focus on retaining key talent, top performers can expect a 1.7 times higher increment than average performers, which is moderately lower than last year.

Employees at individual contributor and junior management levels can expect a 1.3 times higher increment than the top management level, it added.

Meanwhile, a third of the participating companies expected to make lower promotions than last year, while the overall percentage of employees receiving promotions is projected to remain steady at 12 per cent in 2025.

Most companies expect to not increase their promotion-linked pay increases compared with previous years, it stated.

Attrition in 2024 has moderated to 17.4 per cent, however, it is important to highlight that companies across sectors and sizes are still quite optimistic about hiring, and almost 80 per cent of companies plan to increase headcount in the coming financial year, it said.

The report found that organisations increasingly adopt a structured, data-driven approach to workforce upskilling by implementing a common skills framework to identify talent capability gaps.

However, one in every two organisations acknowledged that they do not have a structured competency framework or do not update it regularly, it added.