Average salary hike in India expected to be at 8.8% in 2025, 12% employees to receive promotions: Report

The average increment in pay in India is expected to be at 8.8% in 2025 as the companies in the country are focused on optimising compensation cost budgets amid global and local headwinds, Deloitte India said on Friday.

In a report titled Deloitte India Talent Outlook 2025, pay increases in 2025 are forecasted to be at 8.8% against 9% in 2024. Nearly 75% of the companies are expected to either reduce or give the same pay increase as last year, the report said.

While most sectors will keep the pay raise stable or moderately lower than in 2024, the consumer products sector may have a significantly lower increment budget, it added.

"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.

The Deloitte India Talent Outlook 2025 report is based on a survey of leaders from over 500 companies in the country across seven sectors.

While organisations aim to retain key talent, top performers can expect a 1.7 times higher pay increase than others, which is moderately lower than in 2024, the report said, adding that employees at individual contributor and junior management levels are expected a 1.3 times higher increment as compared to the top management level.

Nearly one-third of the participating companies are expected to promote fewer people than last year and 12% of the total employees overall are projected to receive promotions, similar to last year. Moreover, most companies are expected to not increase their promotion-linked pay when compared with previous years, the report noted.

Most companies across all sectors and sizes, however, are still positive about hiring and around 80% of the companies have plans to increase headcount in the coming financial year, it added. The attrition (gradual headcount reduction) rate in 2024 was at 17.4%.

While companies are increasingly adopting a structured and data-driven approach to workforce upskilling by establishing a common skills framework to identify talent capability gaps, one in every two organisations admitted that they either do not have such a framework or don't update it regularly, the report stated.