India Inc Salary Hikes Expected To Average 9.1% In 2026 Amid Skills-Based Pay Shift: EY India Report

New Delhi, Feb 24 (KNN) India Inc is projected to roll out an average salary increase of 9.1 per cent in 2026, as companies adopt sharper, skills-led pay strategies, according to the fourth edition of the Future of Pay report by EY India. 

The findings are based on inputs from 178 companies across 16 sectors.

Sector-Wise Trends and Attrition

Global Capability Centres (GCCs) are expected to see the highest projected hikes at 10.4 per cent, followed by financial services (10 per cent), e-commerce (9.9 per cent), and life sciences and pharmaceuticals (9.7 per cent), the EY India report cited by PTI said.

Attrition eased to 16.4 per cent in 2025 from 17.5 per cent in 2024, with over 80 per cent of exits remaining voluntary. Financial services recorded the highest attrition at 24 per cent, followed by professional services (21.3 per cent) and Hi-Tech and IT (20.5 per cent). GCCs reported lower attrition at 14.1 per cent.

Shift to Skills-Based and Data-Driven Pay

The report said that compensation strategies are increasingly focused on skills and outcomes rather than uniform annual increments. 

Around 45–50 per cent of organisations are moving towards skill-based pay models, with emerging tech roles in AI, generative AI, machine learning and engineering commanding up to a 40 per cent premium.

Between 50–60 per cent of large organisations now use analytics in compensation planning, reflecting a growing shift to data-driven reward decisions.

Long-Term Incentives and Leadership Pay

Companies are also strengthening long-term incentive plans (LTIPs) to support retention and performance alignment. About 30 per cent run multiple LTIs, while ESOP adoption rose to 78 per cent in 2025 from 71 per cent in 2024. Nearly 75 per cent of National Stock Exchange of India (NSE) 200 companies offer LTIs, now a standard part of CEO compensation.

Median CEO pay in NIFTY 200 companies reached Rs 7–9 crore in 2025, up 12–15 per cent year-on-year. On average, 25–30 per cent of CEO pay is fixed, 25–30 per cent comes from short-term incentives, and 45–50 per cent from long-term incentives. COOs and CFOs are the next highest-paid roles.

The report also noted that the implementation of India’s new Labour Codes is prompting companies to reassess wage structures, payroll systems and statutory compliance frameworks.

(KNN Bureau)