With the new financial year beginning from April 1 and most of the IT companies having completed performance review of their employees, a clear picture is going to be out in terms of salary hike. Meanwhile, responses from 75% of the companies that participated in the Deloitte India Talent Outlook 2025 have shown that they will either reduce or keep their pay increases same as the last year. The focus lies more on optimizing cost budgets, with pay increases for 2025 being forecast at 8.8% which is low when compared to last year’s pay increase of 9%.
A total of 500 companies participated in this program and a third of the participating companies have expected to make lower promotions than last year. As per the insights shared by Deloitte, the percentage of employees receiving promotions is projected to remain steady at 12%. Likewise, most companies expect to not increase their promotion-linked pay increases when compared to 2024.
Retention of key talent
However, the organizations are careful enough to retain key talent and top performers can expect a 1.7 times higher increment in their salaries than average performers. Even this increment is moderately lower than last year. Furthermore, individual contributor employees and junior management level ones are expected to receive 1.3 times higher increment than the top management level.
It is essential for the workforce to upskill and reskills themselves. At the same time, organisations should adopt a structured, data-driven approach to workforce upskilling/re-skilling by implementing a common skills framework to identify talent capability gaps. The report highlighted, a few organisations have enhanced the pace of AI adoption in learning, focusing on areas of skill-gap analysis, content curation and AI-powered development journeys.
Lack of structured competency framework
However, of the companies who responded in this program, one in every two organisations acknowledged that either they do not have a structured competency framework or do not update it regularly. They also indicated challenges in balancing business priorities and training needs, assessing skill gaps, measuring the impact of the learning initiatives and keeping up with technology.
In 2024, the attrition stood at a moderate scale of 17.4%. Attrition rate refers to the percentage of employees who leave a company over a specific period of time. In fact, this rate helps HR measure employee retention and status of the organization. The Deloitte report highlighted that companies across sectors and sizes are optimistic about hiring, and almost 80% of companies plan to increase headcount in the coming financial year.
Prakhar Tripathi, Partner, Deloitte India, said, “In an environment where companies are witnessing muted revenue growth, compensation budgets are naturally coming under pressure. Controlled attrition and moderate inflation are helping companies optimise pay increases without adversely affecting talent outcomes.”
Apart from upskilling, pay increment, retention of key talent in the company, adoption of technology in HR has helped decision-making on the basis of data. Many organisations use data analytics to manage their human capital in compensation management, workforce productivity, learning and development, and diversity. Organisations have highlighted issues pertaining to integrating multiple HR systems, the cost of purchasing and maintaining HRMS and employee adoption, which is hindering significant productivity gains. “We expect the focus on performance and talent differentiation to remain core to the HR strategies, regardless of other considerations,” Prakhar added.