According to the ‘EY Future of Pay’ report, 6 out of 10 employers in India are keen to explore the potential of artificial intelligence (AI) in employee reward and pay strategies in the next three years.
Salary Hike: Companies in India may give an average salary hike of 9.4 percent this year. This is slightly less than the 9.6 percent salary hike in 2024. According to the ‘EY Future of Pay’ report, 6 out of 10 employers in India are keen to explore the potential of artificial intelligence (AI) in the next three years to reward employees and for salary strategies.
The report shows that Indian companies may give an average salary hike of 9.4 percent in 2025, which is slightly less than the 9.6 percent salary hike recorded in 2024. The rate of employees attrition has come down to 17.5 percent in 2024 from 18.3 percent in 2023.
According to the report, the e-commerce sector is expected to witness the highest salary growth of 10.5 per cent in 2025, driven by the rapid expansion of online businesses, rising consumer spending and technology advancements. The financial services sector is projected to see a salary increase of 10.3 per cent this year, while global capability centres (GCCs) are expected to see a 10.2 per cent salary increase.
However, salary growth in the information technology (IT) and IT-enabled services sector is expected to remain sluggish. Salary growth in the IT sector is expected to decline from 9.8 per cent in 2024 to 9.6 per cent in 2025, while salary growth in IT-enabled services is expected to decline from 9.2 per cent to nine per cent. Meanwhile, the automobile, pharmaceutical and manufacturing sectors have been showing stagnant salary trends.
According to the report, about 60 per cent of Indian employers are looking to leverage AI in key areas such as salary determination, real-time pay parity analysis and customizable benefits for employees. The report said, companies are set to adopt AI-driven analysis and real-time salary adjustments in place of salary fixation and fixed incentive models by 2028.
According to the report, with platforms powered by AI tools, companies can now personalize employee benefits, customize the benefits offered to them and ensure pay parity in a diverse workforce.
In addition, blockchain and smart contracts are emerging as key enablers of secure, transparent and automated payroll processing. According to the report, the salaries of Chief Executive Officers (CEOs) of the top 50 companies included in the Nifty index increased by 18-20 percent from 2023 to 2024, which shows a significant increase in executive salaries.
