India Inc. Increments are Stabilizing at ~9% as Companies Focus on Cost Discipline: Deloitte India Talent Outlook

Against the backdrop of a resilient macroeconomic environment and sector-specific growth dynamics, salary increment budgets across India Inc. are expected to remain stable in 2026, with moderate differentiation across industries. Deloitte India Talent Outlook findings indicate that companies are projecting pay increases at 9.1 percent for 2026 (compared with 9.0 percent in 2025). Overall, companies are adopting a more calibrated approach to compensation planning, balancing the need to retain critical talent with a strong push towards productivity and cost discipline.

Specific pockets within industries such as manufacturing and financial services are maintaining relatively higher salary increases to support growth and consequent hiring needs. The technology sector is taking a cautious stance, with both product and service companies reducing their projections by 10–70 basis points compared to last year. Companies in the consumer sector are expecting marginally better pay increases at about 40 basis points. The pharmaceutical and life sciences sector, on aggregate, is projecting one of the highest salary increases this year at close to 10 percent.    

While overall increments remain stable, organisations continue to reward high performers and critical skills more aggressively by sharpening the bell curve. Per the Deloitte survey findings, the share of employees receiving the highest rating on a five-point performance scale declined by 300 basis points: from 10 percent in 2024 to 7 percent in 2025. At the same time, approximately 16 percent of the workforce now falls within the bottom two performance ratings, reflecting a more rigorous calibration of performance outcomes.

“The last few years have seen most organisations revert to operating within a narrow spectrum of salary increases every year. Decisions on talent and rewards have shifted as employees and companies are operating in a buyer’s market across most skill categories. There is a far greater focus on driving productivity and ensuring effective and directed skilling spends”. — Anandorup Ghose, Partner, Deloitte India

Anandorup Ghose, Partner, Deloitte India, said, “The last few years have seen most organisations revert to operating within a narrow spectrum of salary increases every year. Decisions on talent and rewards have shifted as employees and companies are operating in a buyer’s market across most skill categories. There is a far greater focus on driving productivity and ensuring effective and directed skilling spends”.

While the proportion of employees receiving the top performance rating has declined, the share of employees promoted has increased from 12 percent in 2024 to 14 percent in 2025, with higher levels observed in manufacturing and operationally intensive organisations. Notably, promotion rates are now nearly twice the proportion of top-rated performers, indicating that companies are rewarding current performance as well as future potential and readiness. However, organisations will need to balance this approach carefully to avoid long-term title and designation inflation.

Attrition in 2025 edged up marginally to 17.6 percent, compared to 17.4 percent in 2024, but the increase does not reflect any significant upswing in hiring activity, as some of it is also based on growth in involuntary attrition. Companies are not reacting with proportionately higher increments, indicating that the labour market has stabilised. Talent supply has also improved, with a broader pool emerging from Tier-2 and Tier-3 cities and stronger campus hiring pipelines.

Organisations are rapidly embedding a skills-based approach to talent development, with competency frameworks now widely institutionalised. Nearly three-quarters of organisations report having both behavioural and technical competency frameworks, which are increasingly being integrated across performance management, learning journeys and career development.

At the same time, the learning operating model has firmly shifted to a digital model. Virtual learning now accounts for nearly 70 percent of training delivery; however, organisations still acknowledge the greater outcomes generated through in-person learning. Also, while organisations have largely solved for scale and accessibility, the more structural challenges remain unchanged. Measuring the impact of learning initiatives, balancing business priorities with time for learning, assessing skill gaps and keeping pace with rapidly evolving technologies continue to be the most cited challenges, with approximately 60 percent of organisations reporting that to be the most important question.

Industry-wise increment projections

Disclaimer: This article is based on a press release and has been published with minimal modifications for clarity and formatting.