India Inc poised to see average salary hike of 9.4% in 2025, tad lower than 9.6% last year: Report

As per the report findings, the e-commerce sector is expected to see the highest salary increment of 10.5% in 2025, driven by the rapid expansion of digital commerce, rising consumer spending, and technological advancements.

New Delhi: India Inc is set to witness an average salary increase of 9.4 per cent in 2025, a slight moderation from the 9.6 per cent recorded in 2024, according to EY Future of Pay report.

The report showed that as many as 6 in 10 Indian employers are keen to explore the potential of AI for employee rewards and compensation strategies over the next three years.

"The report reveals that India Inc. is set to witness an average salary increase of 9.4 per cent in 2025, a slight moderation from the 9.6 per cent recorded in 2024. Overall employee attrition rate dropped from 18.3 per cent in 2023 to 17.5 per cent in 2024," it said.

Nearly 60 per cent employers are looking to leverage AI across critical areas such as salary benchmarking, real-time pay equity analysis, and customisable benefits for employees.

The report noted that firms are poised to transition from manual pay benchmarking and fixed incentive models to AI-driven predictive analytics and real-time salary adjustments by 2028.

"With AI-powered compensation platforms, companies can now personalise benefits, optimise reward structures, and ensure pay equity across diverse workforce demographics," the report said.

Also blockchain and smart contracts are emerging as key enablers of secure, transparent, and automated payroll processing, particularly for cross-border compensation.

As per the report findings, the e-commerce sector is expected to see the highest salary increment of 10.5 per cent in 2025, driven by the rapid expansion of digital commerce, rising consumer spending, and technological advancements.

The financial services sector follows closely, with projected salary increment of 10.3 per cent in 2025, driven by demand for fintech specialists, digital banking experts, and cybersecurity professionals.

The report also highlights salary increments in Global Capability Centres (GCC), projected at 10.2 per cent in 2025, up from 10 per cent in 2024, as companies continue investing in digital transformation and automation.

However, IT and IT-enabled services sectors are experiencing a slowdown in salary growth, impacted by automation, cost optimisation, and hiring slowdowns, it showed.

IT sector salary increments are expected to decline from 9.8 per cent in 2024 to 9.6 per cent in 2025, while IT-enabled services will see a moderation from 9.2 per cent in 2024 to 9 per cent in 2025, underscoring a strategic shift towards efficiency and leaner workforce structures.

Meanwhile, automotive, pharmaceuticals, and manufacturing sectors continue to display steady compensation trends, it said.

According to the report, CEO pay in Nifty50 companies surged by 18-20 per cent from 2023 to 2024, reflecting a significant increase in executive compensation.

Notably, promoter CEOs earn 30-40 per cent more than professional CEOs, with an increasing preference for internal promotions, as 40-45 per cent of CEO transitions in the past five years were internal.

"The report highlights that 70 per cent of CEO compensation is performance-linked, with incentives tied to business growth, ESG (Environmental, Social, and Governance) goals, and long-term sustainability," it said.