Salaries of corporate employees in India rose 15.1 per cent last year, and the realty business handed out the biggest raises, leaving behind the outsourcing sector that has been known for the most generous pay hikes in recent years.
According to human resources consulting firm Hewitt Associates, this is the fifth straight year in which salaries have registered double-digit growth — also one of the highest in the world. The trend is likely to continue through this year, driven by a booming economy and a shortage of talent, Hewitt said, adding that the increase in 2008 would average around 15.2 per cent.
The estimates and projections are based on a survey of 600 companies — both Indian and foreign — across 19 sectors and 22 sub-sectors. The study measures actual and projected salary increases, and compensation practices for six specific job categories ranging from manual workforce to top executive.
“Employees are increasingly looking for great career opportunities and are actively being pursued by other organisations offering extremely attractive opportunities and packages. Organisations are using compensation as a strategic lever to attract, retain and motivate talent,” said Sandeep Chaudhary, leader of Hewitt’s rewards consulting practice in India.
For the third consecutive year, India has recorded the highest salary increase in the Asia Pacific region.
In 2007, salaries in the real-estate sector increased by 25.2 per cent. IT and BPO sectors offered average pay hikes of 15.4 and 14.1 per cent respectively.
Contrary to the late 1990s, when senior and top management enjoyed the highest salary increases, since 2000, staff members at the junior manager and professional have received the highest increase, Hewitt said.
Middle management salary hikes have started creeping up. This is largely a result of a shortage of managerial and technical talent in India. Hewitt research indicates that India faces a shortage of leadership talent at 26 per cent.
The shortage of talent is expected to ease in couple of years with higher spending by government and private businesses on education and training.
The study also said attrition rates have reached an all-time high with the insurance industry reporting the highest at 35.2 per cent, followed by IT-enabled services at 28.9 per cent and hospitality business at 27.1 per cent.