Corporate India is likely to offer average salary hikes of 9.1% in 2026, according to EY India’s Future of Pay 2025-26 report. The projected increase compares with 9.3% in 2025 and 9.6% in 2024, signalling what the consultancy describes as a phase of normalisation in salary budgets rather than a renewed expansion cycle.
GCCs outpace traditional sectors
Global Capability Centres (GCCs) are expected to lead pay growth with projected increments of 10.4% in 2026, supported by sustained global demand for digital and engineering talent. Financial services are projected to hold steady at 10%, while e-commerce may see hikes of 9.9%, as per the EY report.
In contrast, capital-intensive sectors such as metals & mining and oil & gas are expected to remain structurally lower at around 8.5%, reflecting tighter margin conditions and cautious capital spending, the report added.
Even as overall budgets steady, companies are widening the gap between top and average performers. AS per the EY report, outstanding performers could receive 1.5 to 1.6 times the standard increment, while those not meeting expectations may see significantly lower increases.
Variable pay and ESG metrics gain ground
According to the report, the moderation in fixed pay is being accompanied by a steady rise in at-risk compensation. Average variable pay rose to 16.1% of fixed salary in 2025, up from 14.8% a year earlier.
Among senior leaders, variable components account for a much larger share of total pay, with CXOs seeing variable pay at around 27.5% of fixed compensation. Around 35% of large companies now link a portion of leadership variable pay to ESG metrics, underscoring the growing role of governance and sustainability in compensation design, the report added.
Employee stock option plans (ESOPs) remain the dominant long-term incentive tool, used by 78% of organisations, the report said.
AI skills command steep premiums
The report further added that nearly half of the organisations surveyed have adopted or are transitioning toward such models. Roles in generative AI, machine learning and advanced analytics are attracting base pay premiums of 30–40% or more, particularly in technology firms and GCCs. Hybrid business-technology skills are also commanding double-digit premiums.
Firms are increasingly reviewing skill premiums more frequently, in some cases quarterly, reflecting the faster lifecycle of emerging digital capabilities.
Attrition cools, growth concerns rise
Overall attrition declined to 16.4% in 2025, from 17.5% a year earlier, indicating a cooling labour market. However, more than 80% of exits remain voluntary. In a notable shift, limited growth opportunities have overtaken pay as the top driver of voluntary exits. Financial services continue to report the highest attrition at 24%, while GCCs remain relatively stable at 14.1%.