Salary hikes and bonuses may be back this appraisal season, as Indian companies strive to retain talent and resume expansion plans put on hold after the global economy slumped in 2008.
Human resource managers and employers across industries are increasingly sharing this upbeat outlook as latest data on the broader economy suggests that the strong recovery it has staged in recent months is sustainable through a longer term.
“India Inc seems to be having a good year,” said Mohandas Pai, member of the board and head of HRD, education and research at Infosys.
“I estimate that for the next year the hikes will be in the upper single digits as an average with larger hikes for high performers.”
This is in sharp contrast to 2009 when many companies retrenched employees to reduce wage bills amid the piling rubble of the economic downturn.
Banking, financial services and information technology sectors --- the worst meltdown-hit industries --- could well turn out be the sectors handing out the fattest bonuses as the battle for retaining talent hots up.
“Organisations, particularly those in investment banking, have opted to increase the fixed compensation by 40-50 per cent,” said Manisha Deva, client partner of Korn Ferry, a global human resource consulting firm.
A slew of recent data has triggered hopes that the worst might be over for the Indian economy. Industrial output grew by 11.7 per cent in November, the highest in two years, raising prospects of a sustained revival in the broader economy in the coming months.
Automobile sales grew by 68 per cent in December, while exports have turned positive in November after contracting for 13 successive months.
“The business sentiment and outlook towards employment in particular has shown marked improvements,” said Gayatri Varma, vice president, HR at American Express.
“India remains a growth market and we are focussed on our strategy of talent attraction.”
Infrastructure could also be a major battle zone for talent retention as government shifts focus on creating roads and ports.
“The hikes may be larger in the infrastructure area as they are suffering from lack of senior people,” said Infosys’ Pai.