Salaries increments in India to grow at 9.2% in 2025 as attrition rate stabilises: Report

Amid rising global uncertainties and softening, salary increments in India are expected to increase by an average of 9.2% in 2025 in contrast to 9.3% a year ago, a report said on Wednesday.

According to Aon plc’s Annual Salary Increase and Turnover Survey 2024-25, India is poised for a stable growth story, despite growing geopolitical uncertainties.

The expected stabilisation of salary increments in 2025 follows the easing of attrition rates in Indian companies.

India has witnessed a declining trend in salary increments since 2022 when companies were offering an average 10.6% salary raise due to the Great Resignation– a period when a large number of people voluntarily left their jobs, particularly during the COVID-19 pandemic, driven by dissatisfaction with work conditions and a desire for better opportunities.

Declining attrition rates

The overall attrition rate declined from 18.7% in 2023 and 21.4% in 2022 to 17.7% in 2024, pointing towards the availability of a large pull of talent post the Grear Resignation.

Global uncertainties

"The downward trend in projected salary increase could be in response to external factors like the geopolitical and economic developments, the potential impact of US trade policies, conflict in the Middle East and the explosive pace of generative AI advancements,” said Roopank Chaudhary, partner and rewards consulting leader for Talent Solutions for India at Aon.

Chaudhary, however, added that despite external uncertainties, India's economic prospects remain stable, with rural demand improving and private consumption maintaining momentum.

Pay hikes are projected to vary across industries with engineering design services and auto/vehicle manufacturing budgeting for the highest salary increases of 10.2%, followed by non-banking financial companies at 10%, according to the report.

"Our data shows that moderation in salaries is an expected outcome given the margin pressures on companies. The sector-wise increment trends for 2025 reflect prudence and adaptability as companies balance market challenges and the need to attract and retain talent across sectors," Chaudhary said.

The study further noted that applying a hands-on approach to total rewards and compensation practices and leveraging AI-driven innovation will enable India companies to achieve sustainable growth.

"In a globally interconnected world, shifting governments, businesses and workforce behaviours and expectations could impact the Indian economy and subsequently the local talent landscape. A comprehensive analysis of market behaviours, robust datasets and advanced technology is essential to anticipate shifts and prepare accordingly,” said Amit Kumar Otwani, associate partner for Talent Solutions for India at Aon.

The study, now in its 30th year, analysed data from over 1,400 companies across 45 industries, and is one of the largest and most comprehensive rewards studies in India.