Understanding the 2025 Salary Increment Landscape

As Indian companies face global and local challenges, the dilemma between managing compensation budgets and controlling costs becomes more pronounced. Deloitte India's Talent Outlook 2025 report sheds light on the expected average salary increment of 8.8%, a slight decrease from the previous year's 9.0%.

With 75% of companies either reducing or maintaining their pay increases at last year's levels, sectors like consumer products anticipate significant budget cuts. However, the focus on performance and talent differentiation remains a core HR strategy, as highlighted by Prakhar Tripathi, Partner at Deloitte India.

Performance-Based Increments and Promotions

The report reveals that top performers can expect increments 1.7 times higher than average, with individual contributors and junior management roles seeing 1.3 times higher increments than top management. Despite these adjustments, one-third of companies expect fewer promotions, keeping the overall promotion rate at 12%.

Optimism in Hiring Amidst Challenges

Nearly 80% of companies remain optimistic about hiring, planning to increase their headcount in the coming financial year. However, the adoption of data-driven approaches to upskilling is still in progress, with half of the companies lacking a structured or regularly updated competency framework.