Indian companies to hand out bigger hikes

New Delhi: Local companies are likely to provide better salary hikes this year than those headquartered abroad to their India-based employees, continuing a trend that started two years ago, according to a survey.

Professional services firm Aon, which surveyed more than 1,400 organisations in 45 sectors, estimates India-based companies to pay a 9.6% increment on average and foreign-headquartered firms to pay 9.3%. Compared with 2023, the hikes will be smaller for both groups.

Till 2021, there was no difference between the pay hikes doled out by the two sets of companies. In 2021, both had paid 9.3% increments on an average.


The variation started showing up from 2022, when India-based firms paid average hikes of 10.7% compared with 10.5% by foreign companies to their employees in India. In 2023, the hikes were 10.1% and 9.6%, respectively.

"While we see a large number of organisations rolling out a hike of 9% this year, there is a variation visible this year between the salary increases in India-headquartered organisations vs those with headquarters based out of advanced economies like the US, UK, Japan, France and Germany," Tarun Sharma, associate director, Talent Solutions at Aon, told ET.

While historically the numbers have been similar between the two sets of companies, this year the cost pressures and looming negative growth sentiment have superseded the local talent dynamics, Sharma said.

While economic uncertainties continue in advanced economies, with Japan and the UK slipping also into recession, business sentiment has remained positive in India. Meanwhile, local companies are grappling with higher attrition compared with foreign firms with operations here.