India’s salary landscape in 2025 will see the ecommerce sector leading with an impressive salary increment projection of 10.5%. This growth is largely driven by the rapid expansion of digital commerce, increasing consumer spending, and advancements in technology.
The financial services sector follows closely behind, with expected salary increases of 10.3%, fueled by the growing demand for fintech specialists, digital banking experts, and cybersecurity professionals.
India Inc Salary Growth Slows Slightly
Across India Inc., the overall salary increase is projected at 9.4% in 2025, slightly down from 9.6% in 2024, as per EY’s latest Future of Pay report. While the overall salary growth remains positive, the report reveals sector-specific shifts.
Global Capability Centres (GCCs) will see a rise in salary increments to 10.2%, up from 10.0% in 2024, as companies continue their investments in digital transformation and automation.
IT Sector Faces Slowdown In Salary Growth
In contrast, salary growth in the IT and IT-enabled services sectors is expected to slow down, primarily due to automation, cost optimization, and hiring slowdowns. Salary increments in the IT sector are projected to decline from 9.8% in 2024 to 9.6% in 2025.
Also Read: India’s White-Collar Job Market Poised For Growth In 2025; Employers Show Confidence In Hiring Surge
Similarly, the IT-enabled services sector will see a slight decrease from 9.2% to 9%, reflecting a broader strategic shift toward efficiency and leaner workforce structures.
While many sectors are experiencing changes, the automotive, pharmaceuticals, and manufacturing industries expect to maintain steady compensation trends in 2025. These sectors will continue to offer stable salary increments, reflecting their consistent demand for talent and operational growth.
Employee Attrition Rates Show Marginal Decline
The report also highlights a marginal decline in employee attrition rates, from 18.3% in 2023 to 17.5% in 2024. This suggests that companies are finding more success in retaining talent, though competition for skilled professionals remains high.
According to Abhishek Sen, Partner and Leader at EY India, “While salary increments remain steady, organisations must go beyond traditional pay structures to attract and retain top talent. Flexibility and financial security are becoming core drivers of employee satisfaction.”
AI and Upskilling Becoming Key Focus For Employers
As companies embrace technological changes, demand for AI-skilled professionals is growing. Roles such as prompt engineering and machine learning are seeing increasing demand, as employees and employers alike anticipate AI’s transformative impact on careers.
Six in 10 Indian employers are looking to leverage AI in critical areas like salary benchmarking, real-time pay equity analysis, and customizable employee benefits. By 2028, many firms expect to shift from traditional pay benchmarking to AI-driven predictive analytics and real-time salary adjustments.
Rise In Executive Compensation And Internal CEO Promotions
The report also found a sharp rise in CEO compensation among Nifty50 companies, with pay surging by 18-20% from 2023 to 2024. Notably, promoter CEOs earn 30-40% more than their professional counterparts. Additionally, an increasing preference for internal CEO promotions is evident, with 40-45% of CEO transitions in the past five years being internal.
Flexible Work And Incentives Gain Prominence In Talent Retention
While competitive salaries are essential, they are no longer sufficient to retain top talent. Flexible work arrangements, including the option to choose in-office days or work remotely, have become crucial to employee satisfaction.
The report reveals that 90% of respondents now work in hybrid setups, blending both in-office and remote work. Furthermore, 50% of employers have shown growing interest in gig and temporary roles, reflecting a demand for more flexible employment models.
As a result, 65% of organisations now believe that offering flexible work options is critical to shaping their talent acquisition strategies.
Incentive programs are also seeing greater adoption. Employee Stock Ownership Plans (ESOPs), Restricted Stock Units (RSUs), and Stock Appreciation Rights (SARs) have increased from 63% in 2020 to 75% in 2024, demonstrating the importance of aligning employee performance with company goals.
At 71%, ESOPs remain the most prevalent long-term incentive, serving as a key tool in talent retention and performance alignment.
Conclusion: A Changing Landscape For Talent Acquisition And Retention
As India’s job market continues to evolve, employers are increasingly focusing on flexibility, AI integration, and performance-based incentives to attract and retain talent.
With salary increments holding steady and a growing shift towards hybrid work models, companies are adapting to the changing demands of the workforce, ensuring they remain competitive in the global market.
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