Indian employees to see modest salary increase in 2003: study

Friday, 24 January 2003, 08:00 Hrs
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NEW DELHI: Indian employees are likely to see a modest increase in salary in 2003 following an improvement in the economic outlook, says a survey.

According to the survey, conducted by global management consultancy major Hewitt Associates and released Thursday, overall salary increases across employee groups in India are expected to range between 8.5 percent and 11.4 percent on average in 2003.

This represents an increase over the 2002 levels when average salary increases ranged between 7.7 percent and 10.9 percent, the report said.

Only four percent of all survey respondents, which included 374 foreign-owned, locally owned and joint venture organisations across 20 industries, indicated the possibility of a salary freeze in 2003, compared to 11 percent in 2002.

"The slight recovery in salary increases in India when compared with levels in 2002 indicates an improvement in the economic outlook," said Ravi Virmani, managing director (South Asia) of Hewitt Associates.

According to Virmani, the survey result also indicates an improvement in projections by companies across the Asia-Pacific region for higher average salary increases next year.

"As India moves towards integration with the global village, talent mobility is gaining in strategic importance and Indian organisations are rapidly aligning their pay levels both regionally and globally," he added.

The 2002 salary increase was lower than in 2001, when the raises were between 10.2 percent and 14.5 percent on average, the report said.

The highest average salary increases of 12.6 percent were awarded to employees in India's booming IT Enabled Services (ITES) segment in 2002.

Software development firms (11.2 percent) and accounting and consulting companies (10.9 percent) followed the ITES segment.

"In 2003, employees in the IT Enabled industry are projected to receive the highest average salary increases (12.7 percent) followed by those in software development (12.3 percent) and IT solutions (11.3 percent)," the report said.

On the other hand, industries where employees received the lowest average salary increases across all levels in 2002 were chemicals (8.1 percent), automobile (8 percent) and banks (5.7 percent).

Employees in the banking industry are likely to be awarded the lowest average salary increases in 2003 at 5.6 percent followed by those in entertainment, communication and publication industries at 6.9 percent, the Hewitt report said.

"The IT Enabled Services, software development, and accounting and legal industries are all currently in a high-growth phase and the talent pool is far more mobile and dynamic," said Nishchae Suri, measurement practice leader for Hewitt Associates.

"Furthermore, the philosophy towards pay should be considered, and organisations in the chemicals and auto industries are traditionally conservative paymasters, as opposed to, say, the IT-Enabled industry," he added.

The Hewitt study also found that India continues to strengthen the linkage between performance and rewards. The survey result revealed that an outstanding performer earns nearly twice the salary increase earned by an average performer.

The ratio increased in 2002, compared with 2001, when an outstanding performer received 1.72 times higher salary increase than an average performer. Hewitt data suggests this trend will continue and grow in 2003.

"As corporate revenues and budgets stagnate or even reduce, and talent attraction and retention pressures continue to increase, firms should consider diverting a higher portion of the kitty toward rewarding critical talent," said Suri.
Source: IANS
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