SalaryGrowth – India Inc Set for Moderate Pay Rise in 2026
SalaryGrowth – Salaries across corporate India are expected to record a modest improvement next year, with average pay hikes projected at 9.1 percent in 2026. The estimate marks a slight increase from the 8.9 percent increment seen in 2025, reflecting steady economic momentum and improving business confidence.
Industry Trends Show Uneven Growth
According to a recent compensation study released by Aon plc, salary growth will not be uniform across sectors. Real estate and infrastructure companies are forecast to offer the highest average increases at 10.2 percent, closely followed by non-banking financial companies at 10.1 percent.
In contrast, the technology consulting and services segment is expected to report the slowest salary expansion, with projected increments of 6.6 percent. While still positive, this suggests a cooling phase for a sector that has seen rapid growth in previous years.
Other industries are likely to post pay rises slightly above the national average. Automotive and vehicle manufacturing, engineering design services, core engineering and manufacturing, as well as retail businesses, are all anticipated to remain competitive in their compensation strategies.
Retail and Life Sciences Maintain Momentum
The retail sector is expected to grant average salary hikes of 9.5 percent, supported by continued expansion in consumer demand and organized retail networks. Meanwhile, life sciences companies are projected to offer increments of 9.4 percent, driven by sustained investment in healthcare innovation and research capabilities.
Global capability centres, which play a key role in supporting multinational operations from India, are forecast to see pay increases of 9.3 percent. Funds and asset management firms are likely to record comparatively moderate growth at 8.5 percent.
The study assessed data from more than 1,400 organisations spanning 45 industries, providing a broad snapshot of compensation planning across the country.
Employers Prioritise Specialised Skills
The report indicates that companies are sharpening their focus on strengthening technology, engineering, and customer-facing functions. As competition intensifies for specialised talent, organisations are aligning salary strategies with long-term business priorities rather than short-term hiring surges.
This shift comes amid evolving market dynamics where digital transformation, advanced engineering capabilities, and customer experience management are increasingly central to corporate growth plans.
Attrition Rates Continue to Ease
Employee attrition has shown a steady decline over the past three years. Overall turnover dropped to 16.2 percent in 2025, compared with 17.7 percent in 2024 and 18.7 percent in 2023. The downward trend suggests that companies are succeeding in stabilising their workforce after a period marked by high mobility and aggressive hiring.
Industry experts attribute the improvement to more focused recruitment practices and stronger emphasis on employee engagement initiatives. Career development opportunities, internal mobility programs, and clearer performance frameworks have contributed to higher retention levels.
Labour Code Changes Influence Compensation Structure
The evolving regulatory landscape is also shaping compensation strategies. With India’s labour codes now formally notified, businesses are navigating one of the most significant policy shifts in recent decades.
Amit Kumar Otwani, Associate Partner, Talent Solutions, India at Aon, noted that the standardised definition of wages and broader social security coverage are prompting companies to revisit salary structures. Many organisations are reviewing how fixed and variable components are arranged to align with new compliance requirements.
He emphasised that transparent communication will be essential as employers implement these adjustments. Clear explanations around pay restructuring and benefits will help maintain workforce confidence during the transition.
Building a Stable Talent Pipeline
With attrition stabilising and hiring becoming more strategic, companies are now better positioned to focus on skill development and long-term capability building. Investment in targeted upskilling programs is expected to increase as firms prepare for future growth cycles.
A healthier talent environment, combined with regulatory clarity and measured salary growth, suggests that India’s employment market is entering a more balanced phase. While competition for niche expertise remains strong, overall workforce conditions appear more stable compared to recent years.
The 2026 salary outlook signals cautious optimism, with organisations seeking to balance cost management with the need to attract and retain skilled professionals in a competitive market.