Salary increases are the latest casualty faced by Indian companies struggling to brave the global economic downturn. According to the 13th annual Salary Increase Survey conducted by Hewitt Associates,salary increase projections for 2009 in India have dipped to 8.2 per cent from an actual increase of 13.3 per cent in 2008. Yet,these are the highest in the Asia-Pacific region and among the highest globally. Significantly,amid global layoffs,less than 16 per cent of companies in India are considering retrenchment.
India will see single-digit salary increases for the first time in six years. Hewitt expects that the salary increase projections might fall even further in the coming months as the data for the survey was collected over December 2008 to January 2009. Sandeep Chaudhary,leader of Hewitts Performance and Rewards Consulting practice in India,said,The downturn has hit all economies across the globe,and those that had dependent economic ties with the USA are the ones most affected. Expectedly,salary increase projections have dipped from previous years. In spite of this,the Indian and Chinese economies are continuing to grow at greater than 7 per cent,and salary increases in these markets will be among the highest in the globe.
Most companies are drastically cutting down on luxuries and discretionary expenses such as non-billable travel and entertainment,with a greater focus on prudence and productivity. The intent is to avoid layoffs to the extent possible by limiting other spends. India is a strong bet for most global companies,as a growing market as well as a source for highly competent talent that is still more cost-efficient than in the West. Moreover,layoffs are a highly sensitive and politicised issue in many markets,including India, added Chaudhury.
The Indian pharmaceutical sector has the highest salary projection for 2009. Over the last two to three years,the Indian pharmaceutical sector has been shedding its traditionally conservative approach and giving high market corrections in order to make its place in a competitive talent market, said Chaudhury.
Sectors that cater directly to consumers,such as FMCG,consumer durables and telecom are among those projecting the highest salary increases. Healthcare is another sector that is doing well globally and in India.
On the other hand,the economic downturn has taken its toll on salary increases for the retail,IT,and banking,financial services and insurance (BFSI) sectors. Retail and IT already experienced a downward trend over the last few years,and the curve is expected to dip even more sharply this year.
The entertainment,communications,and publishing industries,which are directly dependent upon other industries for advertising revenue,are witnessing sharp reductions in salary increases. The downturn has led to a significant reduction in the construction and steel sector,with prices falling by almost 40 per cent in the last six months. Expectedly,salary increases in the metals sector too have taken a big hit.
India will see single-digit salary increases for the first time in six years
Salary increases in the Indian and Chinese economies will be among the highest in the world
Most companies are drastically cutting down on luxuries and discretionary expenses to avoid layoffs
India is a strong bet for most global companies,as a growing market as well as a source for highly competent talent that is still more cost-efficient than in the West
Layoffs are a highly sensitive issue in many markets,including India
Telecom services 11.3
Information Technology 5.7
Energy (oil/gas/coal) 7.3