India’s average salary increment is projected to decline in 2025, marking the lowest increase in over a decade (excluding 2020-2021), according to the Deloitte India Talent Outlook 2025 survey. The report highlights that salary hikes will drop to 8.8% in 2025, down from 9% in 2024, as companies focus on optimizing compensation costs due to economic and global uncertainties.
Despite this decline, organizations remain committed to retaining top talent, with high-performing employees and junior management personnel expected to receive higher increments than others. The consumer sector, however, is expected to face the sharpest decline in pay raises.
This article explores key findings from the Deloitte survey, factors influencing salary trends, sector-specific pay hikes, and the outlook for promotions and hiring in 2025.
Why Are Salary Hikes Expected to Decline in 2025?
Global & Domestic Economic Challenges
Companies across various industries are facing financial pressures, leading them to adopt a cautious approach to salary increments. The main reasons for this decline include:
- Global Economic Slowdown: Businesses are navigating inflation, geopolitical tensions, and uncertain market conditions.
- Cost Optimization Strategies: Organizations are focused on controlling payroll budgets to maintain profitability.
- Weak Consumer Demand: Industries like consumer goods and retail have seen lower revenues, forcing them to tighten salary budgets.
According to Deloitte, 75% of companies are likely to reduce or maintain their pay increments at 2024 levels.
Key Insight: This marks the lowest average salary hike in a decade, except for the pandemic-affected period of 2020-2021.
Sector-Wise Breakdown of Salary Increments
Which Sectors Will See the Most & Least Salary Growth?
| Sector | Expected Salary Hike in 2025 | Remarks |
|---|---|---|
| IT & Technology | 9% – 9.5% | Stable increments due to demand for tech professionals. |
| Banking & Financial Services (BFSI) | 8.5% – 9% | Competitive salaries for specialized roles. |
| Pharmaceuticals & Healthcare | 8.5% – 9.2% | Strong salary growth due to healthcare demand. |
| Manufacturing & Engineering | 8.2% – 8.7% | Moderate hikes as industrial production stabilizes. |
| Consumer Goods & Retail | 7.5% – 8% | Lowest pay hikes due to weak consumer demand. |
Key Takeaway: IT, finance, and healthcare sectors are likely to maintain steady increments, while consumer-focused industries may see significant reductions.
Who Will Get the Highest Salary Hikes?
Despite an overall slowdown in pay raises, high performers and junior-level employees will still see better-than-average increments.
Key Findings from the Deloitte Survey:
- Top performers will receive 1.7x higher increments compared to average performers.
- Junior-level employees & individual contributors can expect 1.3x higher raises than senior management.
This indicates that while companies are cutting overall salary budgets, they are still prioritizing key talent retention.
Strategic Insight: Employees in critical roles or high-demand skill areas will have better salary growth opportunities.
Promotions & Attrition Trends in 2025
Will Companies Reduce Promotions?
- One-third of surveyed companies plan to reduce promotions in 2025.
- However, the overall percentage of employees receiving promotions is expected to remain at 12%.
- Most organizations will not increase promotion-linked pay hikes compared to 2024.
Employee Attrition: A Moderating Trend
- Attrition rates have declined to 17.4% in 2024, reflecting improved job stability.
- Despite lower salary hikes, 80% of companies plan to expand their workforce in 2025.
Workforce Trend: While salary increments and promotions may be limited, companies are still optimistic about hiring in the upcoming year.
Comparison of Salary Hikes: 2024 vs. 2025
| Year | Average Salary Hike | Trend |
|---|---|---|
| 2024 | 9.0% | Moderate increases across industries. |
| 2025 | 8.8% | Decline in increments due to cost-cutting strategies. |
Observation: Companies are adopting a cost-conscious compensation approach, with salary hikes decreasing slightly from 2024 levels.
How Employees Can Navigate Lower Salary Hikes
1. Upskilling & Reskilling
- Employees with in-demand skills (AI, data analytics, cybersecurity, finance, and healthcare expertise) are more likely to secure higher increments.
- Investing in professional certifications can improve salary prospects.
2. Performance-Based Negotiation
- High-performing employees should negotiate pay raises based on measurable contributions to business growth.
3. Exploring Internal Mobility
- Employees can seek internal transfers to higher-paying roles within their organizations.
4. Seeking Job Opportunities in Growth Sectors
- Industries like technology, finance, and healthcare are expected to offer better salary growth compared to consumer-driven sectors.
Proactive Approach: Employees must focus on enhancing skills, proving their value, and considering job shifts to maximize their earning potential.
What to Expect in 2025
Although India’s average pay hike is set to decline to 8.8%, companies will still reward top performers and retain essential talent.
✅ IT, finance, and healthcare will offer stable salary increments.
✅ Consumer goods & retail sectors may experience lower raises due to weak demand.
✅ Upskilling and performance-driven strategies will be crucial for maximizing salary growth.
✅ Despite cautious pay hikes, hiring remains strong, signaling positive job market trends.
As 2025 approaches, professionals should focus on career growth strategies to stay competitive in an evolving job market.
Frequently Asked Questions
1. Why are salary hikes expected to be lower in 2025?
Companies are optimizing compensation budgets due to economic uncertainties, global slowdown, and lower consumer spending, leading to moderate salary increments.
2. Which industries will see the highest pay hikes?
Sectors like technology, banking, and healthcare are expected to offer better salary growth compared to consumer goods and retail industries.
3. How will promotions be impacted in 2025?
While one-third of companies plan to reduce promotions, the overall promotion rate will remain at 12%, with no significant pay increases linked to promotions.
4. How can employees improve their salary growth?
Employees can focus on upskilling, negotiating performance-based raises, and exploring higher-paying roles in growing sectors.
5. Will companies continue hiring despite lower salary hikes?
Yes, 80% of companies plan to increase their workforce in 2025, indicating positive hiring trends despite cost-cutting measures.
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Kishan is a knowledgeable writer specializing in agriculture and the latest government job recruitments, delivering clear and insightful content to inform and empower readers.
