Salary growth in the IT and IT-enabled services sectors is slowing due to automation, cost optimisation and reduced hiring,
IT sector salary increments are anticipated to decline from 9.8% in 2024 to 9.6% in 2025, while IT-enabled services are expected to moderate from 9.2% to 9%. Meanwhile, global capability centres (GCCs) are projected to experience salary hikes of 10.2% in 2025, up from 10.0% in 2024.
six in ten Indian employers are exploring the use of artificial intelligence (AI) in employee rewards and compensation strategies over the next three years.
The report highlights that India Inc is projected to witness an average salary increase of 9.4% in 2025, slightly lower than the 9.6% recorded in 2024. Employee attrition rates declined from 18.3% in 2023 to 17.5% in 2024.
Salary trends across industries
The report projects that the e-commerce sector will witness the highest salary increments in 2025, at 10.5%, driven by rapid digital commerce expansion, rising consumer spending, and technological advancements. The financial services sector follows closely, with an expected salary increase of 10.3%, fuelled by demand for fintech specialists, digital banking experts and cybersecurity professionals.
Meanwhile, the automotive, pharmaceutical, and manufacturing sectors are maintaining steady compensation trends. However, other industries are witnessing varied salary growth patterns, with certain sectors poised for significant increments.
AI-driven and real-time compensation trends
According to the report, 60% of employers intend to incorporate AI in crucial areas such as salary benchmarking, real-time pay equity analysis, and customisable employee benefits. Companies are shifting from manual pay benchmarking and fixed incentive models to AI-powered predictive analytics and real-time salary adjustments, with this transition expected to materialise by 2028.
AI-enabled compensation platforms allow organisations to personalise benefits, optimise reward structures, and ensure equitable pay across workforce demographics. Additionally, blockchain and smart contracts are emerging as tools for secure, transparent, and automated payroll processing, particularly for cross-border payments.
Discussing the findings, Abhishek Sen, Partner and Leader, Total Rewards, HR Technology and Learning, People Consulting, EY India, stated, “While salary increments remain steady, organisations must go beyond traditional pay structures to attract and retain top talent in the near future. Flexibility and financial security are becoming core drivers of employee satisfaction.”
The report identifies three key ways in which AI is transforming compensation strategies. The first is optimised pay structures, with AI predictive models set to accelerate pay decisions by factoring in employee life stages, job preferences, and real-time market trends over the next two to three years.
The second is AI-powered upskilling, as firms increasingly invest in AI-driven learning platforms that provide highly customised training modules, equipping employees with in-demand skills for evolving roles. The third is the growing demand for AI talent, with increasing consideration for professionals skilled in AI-related roles such as prompt engineering and machine learning. Employees also foresee AI transforming their career paths, further driving the need for upskilling and adaptability.
