Salaries in India are projected to increase by 9.5 per cent in 2025, compared to an actual increase of 9.3 per cent this year, a report showed on Thursday.

The engineering and manufacturing and retail industries project double-digit increases at 10 per cent, closely followed by financial institutions at 9.9 per cent, indicating the strategic importance employers place on talent in these sectors in the current economic landscape, according to the report by Aon, a leading global professional services firm.

Global capability centres (GCCs) and technology products and platforms expect a more optimistic salary increase at 9.9 per cent and 9.3 per cent, respectively, while the technology consulting and services projected increments at a lower end of 8.1 per cent.

Looking at the attrition analysis, a downward trend is apparent with attrition reported at 16.9 per cent on average this year, compared to 18.7 per cent reported in 2023 and 21.4 percent in 2022.

“Despite evolving global economic challenges, the study indicates a positive business outlook across several sectors in India. This sentiment continues in many of the domestically driven sectors illustrated by the projected increments in the manufacturing, life sciences and retail industries,” said Roopank Chaudhary, partner and head of reward solutions in India for Aon.

The study, the largest and most comprehensive rewards survey in the country, analysed data across 1,176 companies from over 40 industries between July and August.

Organisations committed to retaining talent in a competitive job market must keep abreast of changing market data and understand the rapidly evolving compensation trends.

“Having a holistic rewards strategy based on data and analytics will ensure organisations attract and retain the right talent and continue to build a resilient workforce,” Chaudhary added.

According to Tarun Sharma, associate director for Talent Solutions in India for Aon, the softening in attrition provides businesses a unique opportunity to focus on internal growth, capability building and driving long-term productivity.

Phase two of the study will include data collected in December and January and will be published in early 2025, said the firm.