An average salary increment across India Inc. is likely to be around 7.8 per cent in 2020, 7.8 per cent, claims the inaugural edition of Deloitte India’s Workforce and Increments Trends Survey.

The projected salary increment is 40 basis points lower than the actual salary increment of 8.2 per cent that employees received in 2019.

The decrease in salary increment budget is due to higher margin pressure on companies, economic headwinds, and the trend towards reducing white-collar pay growth in India to become globally competitive.

“While the salary increment figure reflects an overall simple average, when adjusted for company size (measured via headcount), salary increment decreases to 7.1 per cent. If we exclude the IT sector, headcount weighted projected pay increase drops further to 6.8 per cent. This implies that larger organisations are being more cautious with respect to salary increments, says the survey.

The study observed that about 50 per cent companies are projecting a salary increment of less than 8 per cent for the upcoming appraisal cycle and only 8 per cent companies are expecting to offer pay increases greater than 10 per cent.

"There has been a lot of debate on pay increases over the past few years and there is a need for greater responsibility in this process of salary budgeting as compensation cost ratios are increasingly becoming a sore point in boardrooms across the country. The talent market priorities are different from what they were five years ago, and our pay budgeting process and data needs to reflect that", said Anandorup Ghose, Partner at Deloitte India.

Additionally, the drop in pay increase projections has been consistent across industries, the manufacturing sector has seen the sharpest downturn over the past few quarters. IT product and e-commerce firms are anticipated to continue offering some of the highest salary hikes.

Some other sectors projecting above average increments include KPOs, third party BPOs and life sciences.

The survey indicated industries like infrastructure and real estate, NBFCs, and telecom are expected to witness lowest salary increments.