Salaries for executives in India in 2009 will likely stay at 2008 levels or increase marginally, according to a survey released on Thursday, as the economy slows and companies mull cost-cutting measures like layoffs.
According to the survey on compensation and hiring plans, by US human resource consulting firm
Mercer, at least 80 per cent of the companies surveyed in India expect to do worse in 2009 than they did in 2008.
And while most aren’t laying off people, they aren’t planning to hire in strength wither.
Nearly two-thirds of the companies surveyed said they were unlikely to significantly reduce headcounts. However, only one of four companies will continue recruiting at or above replacement levels, which means most companies will only hire replacements.
The survey, called Leading Through Unprecedented Times, was conducted between November 3 and 14. Mercer interviewed around 1,000 human resource and finance executives across the world, including 100 from India.
Mercer’s India head termed the coming freeze as a correction. “India grew on the back of knowledge and people-centric industries such as financial services, information technology and retail. However, a talent crunch led to spiralling employee costs since 2003 and companies have been under severe strain,” said Padma Ravichandar, country leader, Mercer Consulting India. “The current situation should be perceived as a cooling-down period in terms of talent costs.”
The survey also showed companies plan to go easy on increments next year. Around 83 per cent of companies surveyed said raises in 2009 are likely to be lower than originally planned. Around 19 per cent said they were likely to consider freezing 2009 salaries at 2008 levels.
Sanjay Jog, chief people officer, Future Group, said salary hikes would be minimal. Added E Balaji, CEO of Ma Foi Management Consultants, a search firm: “Average increments in 2009 are expected to hover around 8-10 per cent against an average of 15-20 per cent in 2007.”