India Inc. is projected to see an average salary increase of 9.4% in 2025, a slight moderation from the 9.6% hike recorded in 2024, according to the latest EY Future of Pay report. The report also highlighted a decrease in employee attrition, which dropped from 18.3% in 2023 to 17.5% in 2024.
A major trend in the report is the growing interest among employers in leveraging artificial intelligence (AI) for improving employee rewards and compensation strategies.
Nearly 60% of Indian employers are exploring the potential of AI to enhance areas such as salary benchmarking, real-time pay equity analysis, and customizable employee benefits over the next three years, news agency PTI reported.
As businesses move towards more advanced systems, the report forecasts a shift from traditional methods like manual pay benchmarking and fixed incentive models to AI-powered predictive analytics and real-time salary adjustments by 2028. “AI-driven compensation platforms enable companies to personalize benefits, optimize reward structures, and ensure pay equity across diverse workforce demographics,” the report noted.
Blockchain and smart contracts are also emerging as key tools for secure, transparent, and automated payroll processing, particularly for cross-border compensation.
Sector-specific salary trends
The report reveals that certain sectors are poised for stronger salary growth in 2025. The e-commerce sector, for instance, is expected to lead the way with a 10.5% salary increase, driven by the rapid growth of digital commerce, rising consumer spending, and ongoing technological advancements.
The financial services sector is also set to experience a robust 10.3% salary increment, fueled by the demand for specialists in fintech, digital banking, and cybersecurity. Global Capability Centres (GCC) are expected to see salary increases of 10.2% in 2025, a slight rise from 10% in 2024, as companies continue investing in digital transformation and automation.
On the other hand, the IT and IT-enabled services sectors are experiencing slower salary growth due to automation, cost optimization, and hiring slowdowns. Salary increases in the IT sector are expected to decline from 9.8% in 2024 to 9.6% in 2025, while IT-enabled services will see a more modest hike from 9.2% in 2024 to 9% in 2025, reflecting a shift towards leaner workforce structures and greater efficiency.
Meanwhile, sectors such as automotive, pharmaceuticals, and manufacturing continue to show steady compensation trends.
CEO compensation trends
The report also provides insight into CEO pay, with Nifty50 companies seeing a significant 18-20% increase in executive compensation from 2023 to 2024. Promoter CEOs earn 30-40% more than professional CEOs, with a growing preference for internal promotions. In fact, 40-45% of CEO transitions over the past five years were internal.
Also, 70% of CEO compensation is performance-linked, with incentives tied to business growth, environmental, social, and governance (ESG) goals, as well as long-term sustainability objectives.
