As companies in India grapple with both global and local challenges, Companies are facing dilemma between- manage compensation budgets and salary increases in 2025 or focus on cost overrun. According to Deloitte India’s Talent Outlook 2025 report, the average salary increment for the coming year is expected to be 8.8%, slightly lower than the 9.0% seen in 2024.
With many organizations focusing on optimizing costs amidst a period of muted revenue growth, 75% of companies are either reducing or maintaining their pay increases at the same level as last year. While sectors like consumer products anticipate a significant reduction in their increment budgets, most industries are either stabilizing or slightly lowering their increment growth compared to the previous year.
“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,” Prakhar Tripathi, Partner at Deloitte India told news agency PTI.
The report, which surveyed over 500 decision-makers from companies across seven sectors, also revealed that top performers can expect a 1.7 times higher increment than average performers, though this is slightly lower than the previous year. Additionally, employees in individual contributor and junior management roles may see increments 1.3 times higher than those in top management roles.
One-third of companies expect fewer promotions in 2025, with the overall percentage of employees receiving promotions projected to stay at 12%. Despite these adjustments, nearly 80% of companies are still optimistic about hiring and plan to increase their headcount in the coming financial year.
While organizations are making strides in adopting data-driven approaches to upskilling, the report highlighted that half of the companies still lack a structured or regularly updated competency framework to effectively identify talent capability gaps.