The outlook for salary increments in India is slightly dimmer in 2025. According to Deloitte India’s Talent Outlook 2025 survey, average pay hikes are projected to dip to 8.8%, slightly down from 9% in 2024. This marks the lowest salary increment in over a decade, excluding the pandemic-hit years of 2020-2021.
But what’s driving this decline? And what can professionals expect across different sectors? Let’s break it down with a human perspective, practical insights, and helpful comparisons.
Why Are Salary Hikes Expected to Decline in 2025?
Several domestic and global factors are prompting companies to tighten compensation budgets.
Key Reasons Behind the Dip:
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Global Economic Uncertainty: Inflation, supply chain disruptions, and geopolitical tensions are pushing firms to stay cautious.
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Cost Optimization: Companies are actively working to manage payroll and reduce costs without risking profitability.
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Low Consumer Demand: Sectors like retail and consumer goods are witnessing sluggish growth, impacting salary budgets.
Insight: Deloitte reveals that nearly 75% of Indian organizations will either reduce or maintain increments at 2024 levels—signaling a widespread cautious approach.
Sector-Wise Salary Hike Forecast for 2025
Here’s how different industries are projected to perform when it comes to pay hikes:
| Sector | Expected Salary Hike (2025) | Remarks |
|---|---|---|
| IT & Technology | 9% – 9.5% | Demand for tech talent keeps increments stable |
| Banking & Financial Services | 8.5% – 9% | Competitive salaries for niche skills |
| Pharmaceuticals & Healthcare | 8.5% – 9.2% | Strong demand sustains good hikes |
| Manufacturing & Engineering | 8.2% – 8.7% | Stable but moderate increases |
| Consumer Goods & Retail | 7.5% – 8% | Lowest hikes due to poor consumer sentiment |
Key Takeaway: While core sectors like tech, healthcare, and BFSI remain strong, consumer-focused industries may see leaner salary growth.
Who Will Receive the Highest Salary Increments?
Despite a broader slowdown, top performers and junior-level employees are expected to fare better than others.
Insights from Deloitte:
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Top performers may get 1.7x the increment of an average performer.
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Junior-level employees and individual contributors could receive 1.3x higher hikes than senior leadership roles.
Why it Matters: Businesses are consciously prioritizing key talent retention, even amid tighter budgets.
Promotions & Attrition Trends in 2025
What’s Changing with Promotions?
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1 in 3 companies is planning to reduce the number of promotions in 2025.
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Despite that, the overall promotion rate is expected to hold steady at 12%.
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Pay hikes tied to promotions are not expected to increase compared to 2024.
Attrition: The Good News
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Attrition rates dropped to 17.4% in 2024, a sign of growing job stability.
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Interestingly, 80% of companies still plan to expand hiring in 2025.
Workforce Insight: Even with modest salary hikes and fewer promotions, job opportunities are still expanding—especially in growth sectors.
2024 vs. 2025: Salary Increment Comparison
| Year | Average Salary Hike | Trend |
|---|---|---|
| 2024 | 9.0% | Modest increases across sectors |
| 2025 | 8.8% | Dip due to strategic cost management |
Observation: Companies are adopting a cost-conscious compensation model, focusing more on retaining talent rather than offering broad-based hikes.
What Can Employees Do to Stay Ahead?
Lower pay hikes don’t mean lower potential. Here’s how professionals can stay competitive and maximize their earnings:
1. Upskill in High-Demand Areas
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Focus on acquiring expertise in AI, cybersecurity, data analytics, finance, or healthcare.
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Professional certifications can significantly boost your value.
2. Negotiate Based on Performance
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Quantify your contributions to business outcomes.
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Use measurable achievements to justify pay raises.
3. Look Within: Explore Internal Mobility
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Seek higher-paying roles within your current organization.
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Cross-functional experience adds to your resume and pay potential.
4. Consider a Sector Switch
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Move toward industries with higher growth and stronger salary outlooks—tech, BFSI, and healthcare are great bets.
Pro Tip: Be proactive. Enhance your skills, understand industry trends, and stay open to opportunities—both internally and externally.
What to Expect in 2025
Even though the national average pay hike is set to decline, all is not gloomy. Here’s what to keep in mind:
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IT, BFSI, and healthcare are still offering competitive salary increments.
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High-performing individuals and junior employees are better positioned for raises.
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Upskilling, strategic career moves, and strong performance will be crucial.
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Hiring outlook remains strong across many industries—especially in tech and finance.
Frequently Asked Questions (FAQs)
1. Why is the average salary hike in India falling in 2025?
Due to global economic pressures, weak consumer demand, and cost optimization strategies, companies are being more conservative with salary increases.
2. Which sectors are expected to offer the highest pay hikes?
Sectors like IT, banking, and healthcare are expected to provide the highest salary increments due to ongoing demand and skill shortages.
3. Will promotions be fewer in 2025?
Yes, about one-third of companies plan to reduce promotions. However, the total percentage of employees being promoted is expected to remain around 12%.
4. How can I improve my chances of getting a better salary hike?
Focus on upskilling, delivering high performance, seeking internal role changes, or exploring jobs in high-growth sectors.
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