EY, the leading professional services organization, released its ‘Future of Pay’ 2023. The report estimates average salaries in India to increase by 10.2 percent in 2023, lower in comparison to 10.4% (Actuals) in FY’22, but still in double digits.
The reports highlights talent, attrition, and compensation trends across sectors in India Inc. According to the report, sectors that were severely impacted by the pandemic are experiencing a resurgence.
The projected salary increases for 2023 are slightly lower than the actual increases for 2022 across all job levels, except for blue-collar workers who are projected to have a slightly larger decrease in compensation in 2023.
Also Watch, Is The Great Resignation Over? Click Here
The top three sectors with the biggest forecasted salary increases are tied to technology. E-commerce has the highest projected salary growth at 12.5%, followed by professional services at 11.9%, and information technology at 10.8%.
Further, key skills and roles continue to be in demand across sectors and command premium in the market.
Commenting on the findings of the report, Abhishek Sen, Partner & Total Rewards Practice Leader, Workforce Advisory Services, EY India said, “The current talent market in India is dynamic and evolving rapidly, shaped by a combination of global economic trends, technological advancements, and changing workforce expectations.”
“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”, Abhishek Sen added.
Sectors looking to hire in 2023
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.
Top skills in demand
Technology skills such as those in AI, ML and Cloud computing are in high demand and command a premium of 15% to 20% over basic software engineering compensation levels.
Analytical skills like risk modelling, data architecture, and business analytics command a premium of 20% to 25%. 48% organizations offer premium for the skills which are high in demand.
The average premium is of up to 1.9 times for skills that 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.
Variable pay trends
The average variable payout as a percentage of total compensation was 15.6% in 2022 in comparison to 14% in 2021. Financial institutions had the highest overall variable pay-out percentage of 25.5%, indicating a higher emphasis on performance-based incentives.
Whereas the telecommunications industry had an overall variable pay-out percentage of 13.7%, relatively lower compared to other sectors.
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% organizations have wellness programs.
As companies seek to attract and retain top talent, they would incline towards rewards such as equity based long term incentives, customized benefits packages such as student loan repayment assistance, pet insurance, or elder care support, employee assistance programs, flexible work and more.