Firms are adopting a conservative approach to salary budgets, with some delaying appraisal cycles beyond the traditional April-June period. This has introduced uncertainty into salary revisions, making them less predictable in the current business environment.
“Organisations are shifting to skills-based pay, leveraging Tier II hiring for cost efficiency. Instead of salary hikes, retention bonuses, ESOPs, and project-based incentives are being implemented as compensation strategies,” Vij added.
Janoo Motiani, CEO of Reed & Willow, echoed similar sentiments, forecasting a salary hike range of 5-8.5 per cent.
“The days of double-digit hikes seem behind us—at least for now. The industry is settling into a more pragmatic rhythm, with average hikes expected to hover between 5 per cent and 8.5 per cent. This aligns with the cautious optimism seen across the sector. TCS has taken the lead, announcing hikes ranging from 4-8 per cent effective April 2025, setting the tone for the rest of the industry. However, Infosys, HCLTech, Wipro, and Tech Mahindra are holding off on final announcements, likely waiting to gauge market movements in Q2 before locking in their plans,” she said.While the salary growth appears restrained, it reflects broader market conditions. Companies are factoring in tempered business expansion, AI-driven efficiencies, and evolving client needs when determining compensation budgets.
India Inc Salary Trends Show a Gradual Slowdown
Across industries, India Inc is projected to offer an average salary increase of 9.2 per cent in 2025, slightly below the 9.3 per cent hike in 2024, according to Aon, a global professional services firm. Firms are exercising caution due to geopolitical uncertainties, economic fluctuations, and AI’s growing role in reshaping workforce structures.
This continues a declining trend from 2022, when salary hikes peaked at 10.6 per cent, driven by the Great Resignation. During the COVID-19 pandemic, record numbers of employees voluntarily left their jobs, prompting companies to raise pay aggressively to retain talent.
Cooling attrition rates have given employers more financial leeway. Industry-wide attrition in the IT sector averaged 17.7 per cent in 2024, down from 18.3 per cent the previous year, according to Motiani.
Salary Hikes to Vary by Experience and Skill Set
Salary increments will not be uniform across employee levels, with mid- and senior-level professionals likely to see stronger hikes than freshers.
Adecco India expects an average salary hike of 6-10 per cent, with specialised skills in AI and other high-demand areas commanding higher pay increases.
“Freshers will be under scrutiny for their competency levels and can anticipate modest adjustments in the 2-4 per cent range as they work on building their skills and demonstrating adaptability, along with a willingness to learn and collaborate with AI.
“In contrast, mid-level employees with specialised skills, such as in AI or cybersecurity, may see increases of 10-12 per cent due to rising demand for these roles. Senior-level professionals, especially those in leadership positions or niche technical roles, could experience hikes of 12-15 per cent because of their strategic value and expertise in guiding AI and tech transformation efforts,” said Sunil Chemmankotil, Country Manager at Adecco India.
AI, Digital Transformation Driving Higher Salaries in Select Roles
Certain roles in IT are commanding above-average salary hikes due to strong demand, particularly in digital transformation, global capability centre (GCC) expansion, and talent scarcity.
“IT roles, especially in the in-demand areas such as AI/ML, cybersecurity, cloud engineering, and full-stack development, are commanding higher-than-average salary increases. Demand is driven by digital transformation, GCC expansion, and talent scarcity. Niche roles like DevOps, data science, and blockchain development are also seeing premium hikes, especially for experienced professionals with specialised skills,” Vij said.
Adecco India is observing a shift towards agile performance management, with companies increasingly adopting mid-year or quarterly reviews to align compensation dynamically with employee performance. Organisations are also prioritising upskilling and reskilling initiatives, as employees who engage in continuous learning are likely to see better salary growth and career advancement.
Beyond Salaries: Companies Focus on Retention Strategies
As salary hikes moderate, firms are offering a wider range of non-monetary benefits to retain talent. Flexible work arrangements, healthcare benefits, and wellness programmes are becoming crucial retention tools, particularly for companies that are unable to provide significant pay increases.
According to the India Brand Equity Foundation (IBEF), the IT industry contributed 7 per cent to India’s GDP in FY24, highlighting its crucial role in the country’s economy. While salary hikes may not be as generous as in previous years, the sector remains a key driver of employment and technological advancement.
(With PTI inputs)