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According to a Deloitte India survey, average India increments are likely to drop to 9.1 percent in 2023 from 9.4 percent in 2022 with IT likely to see the sharpest drop in increments compared to the previous year – not surprising given the layoffs announced globally by tech giants.
Come April 1, it’s a good time to talk about increments but there is unfortunately not such great news this time around as stubborn inflation, higher interest rates, and a slowing economy are likely to make organisations more cautious this year.
According to a Deloitte India survey, average India increments are likely to drop to 9.1 percent in 2023 from 9.4 percent in 2022 with IT likely to see the sharpest drop in increments compared to the previous year – not surprising given the layoffs announced globally by tech giants. No sector other than services is likely to see higher increments in 2023 versus last year.
Reflecting on Deloitte’s India Talent Outlook 2023 report, Anandorup Ghose, Partner, Deloitte India said, “The significant attrition levels across industries in late 2021 continued until early 2022. We saw Indian organisations budgeting the highest increment in 2022 over the last four years. What they also did was hire aggressively. This led to employee costs rising faster than revenue growth over the last 3–4 years in almost every other company. Stubborn inflation, and a slowing economy are likely to make organisations more cautious this year. We expect increments and attrition to witness lower trends in 2023.”
A look at key takeaways
– IT increments are expected to see big drop in wages YOY and the lowest in a decade (Ex of 2020 which was an abnormal year)
– The sharpest decline will be seen in digital and ecomm cos in CY23
– All sectors except Services are expected to see drop in increements
– Lifesciences and manufacturing to witness the highest increment in 2023, but still lower than 2022
Meanwhile, the adoption of new technology continues to be an ongoing challenge, the survey shows. With 27 percent of organisations reporting major challenges in the integration of new technologies with their existing tech platforms, there is a clear scope for service providers to plan for ecosystem compatibility from an integration as well as a long-term change management and adoption standpoint, it said.
The survey also found that only 19 percent of organisations —mostly in the IT, ITeS, and Consumer sectors — who confirmed that their employees have visibility of skills beyond their current role. This indicates a major gap in the awareness of skill requirements and associated learning. This aspect is further pronounced by the fact that more than 80 percent of organisations reported that leadership teams have no structured data or reporting mechanisms to understand the current skill capital, the report said.
The Deloitte report is based on a survey in January 2023 among 300 organisations across seven sectors and 25 sub-sectors.