Indian Companies May Grant Slightly Lower Wage Hike Of 9% In 2024: Deloitte

India companies may grant slightly lower wage raises in 2024 to safeguard margins amid a stable core inflation, according to a private survey.

The average pay raise is expected to be 9% in 2024, compared to 9.2% in 2023, with one in three organisations planning to give double-digit increments this year, according to Deloitte India Talent Outlook 2024 survey. While lower than last year, increment projections for 2024 are higher than pre-Covid levels across all sectors, except IT and BPOs/KPOs.

The survey predicts that companies are likely to offer double-digit increments to junior management employees but with a high focus on performance-based differentiation. Organisations may be stricter with their bell curves, making it harder to secure top ratings.

Below are some key insights from the survey:

• Top performers can expect 1.8 times the increments given to average-rated employees.

• The percentage of employees expected to be promoted decreased from 12.3% in 2023 to 11.5% in 2024.

• Organisations are likely to maintain a 7.5% increment for promotions to retain key talent.

• One of two companies could pay at-target or above-target bonuses in 2024.

• Attrition rate fell from 20.2% in 2022 to 18.1% in 2023 due to the slow hiring momentum.

“The average employee in India has made peace with a single-digit increment over the past few years," said Anandorup Ghose, partner, CHRO Programme Leader, Deloitte India. "With attrition and core inflation in check, organisations focus more on performance management strategies to protect and boost margins."

Technology-Enabled HR

Technology adoption in human resources has led to increased data-backed decision making. Most organisations apply analytics to manage their human capital, the survey found. However, HR analytics focuses on descriptive and diagnostic analysis in India rather than being predictive and prescriptive for most companies.

The use of HR analytics is highest in variables such as attrition, workforce planning and employee engagement. Indian organisations are also taking measured strides towards adopting AI in human capital management. About 25% organisations use or plan to use AI for talent acquisition and employee engagement and chatbots for query resolutions. A few organisations are also using AI for performance management.

Organisations are moving towards a scientific approach to upskilling their workforce using a common skills framework to identify gaps in their talent capability, according to the survey. While almost three in four organisations today have a skills framework, almost a quarter of them cannot update it regularly to match their evolving business needs.

Although chief experience officers have better visibility of skill demand and supply across jobs, only 30% companies track and maintain this, compared to 19% last year. Most organisations prioritise usage and cost efficiency over directly linking learning interventions to financial improvement.