April 29, 2017

Salaries to grow by 10% and organisations continue to increase headcount– Mercer’s All Industries Total Remuneration Survey

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Salary to grow by 10% and organizations continue to increase headcount– Mercer’s All Industries Total Remuneration Survey

As per Mercer’s 2016 India Total Remuneration Survey released today, organizations are expecting to increase salary by 10% across industries and career levels in 2017, and 54% of these companies are expecting to increase their headcount.

The comprehensive survey represents 768 organizations across various industry sectors. Among different industries surveyed, the projected salary increase ranges from 10% to 11% overall, with relatively higher increases for the Life sciences and Shared Services industries. Over the years, salary increase differentiation across industries has narrowed down.

Salary

salary increases have stabilized around 10%. We also note that the overall increases including promotions and market corrections are pegged at 10.8%” according to Ruchika Pal, Principal & India TRS Product Leader, Mercer.

Ø  10 % salary increase expected across industries in 2017, similar to 2015 and 2016 consistently

Ø  54% companies indicate hiring intentions in the next 12 months, as against 48% last year

Ø  13.3% attrition had been recorded across sectors, with the highest attrition reported in Shared Services

Real wage

Over a five-year period, real wage growth has however been steadily rising, on account of reduced inflation, thereby indicating real wage increase for employees and increasing real wage cost for employers. Pal says that, Against the backdrop of increased demand for talent and high attrition rates, the majority of companies use inflation rate as the basic minimum level to peg their salary increases and engage their employees. The increase in real wages reflects the acute talent demand supply mismatch.  In 2016, most industries, gave increases, in line with what they forecasted in 2015.

Shanthi Naresh, India Business Leader-Talent, Mercer

The talent shortage story is further accentuated by hiring intentions. In 2017, one in two companies is planning to increase headcount, with Shared Services, Hi-tech and Life sciences leading the pack, similar to what was seen in the past r two years. “Largely, organizations are optimistic about delivering business results in 2016. Based on our follow-up spot survey, we note that companies are expecting to see a 2-5% increase in business results, over 2015. Companies in India are bullish about growth and will continue to hire and invest in talent.” says Shanthi Naresh, India Business Leader-Talent, Mercer

Shanthi Naresh

Shanthi Naresh adds More than 70% companies in Hitech and Shared Service are looking to increase their headcount in the next 12 months. Noted that the Hitech and Shared services sector are continuing to grow strongly. India is increasingly becoming a development hub as well as a captive shared services center. Hence, companies are looking to beef up specific functions like product development, data analytics and sciences, ‎and other digital skills. For shared services, the focus is on building domain capabilities aligned to industries from retail to healthcare to traditionally strong F&A. It’s not only about cost arbitrage anymore – it is about becoming an integrated service delivery partner.

Actual variable pay of 17.10% delivered in 2016 was higher than the target of 15.4% indicating that business performance in 2015 was better than 2014 performance, and perhaps even better than expectations. Variable bonuses paid out in 2015 were the highest in the Consumer industry, at 22.1% of annual guaranteed cash. This was followed by the Hitech and Shared Services sectors at 15.8%. No change has been reported however by participants in terms of a change in the variable pay target for 2016/2017.

The overall actual attrition witnessed in 2015 was 13.3%, with the highest attrition reported in the Shared Services sector at 26.2%, followed closely by the life sciences sector at 15.9%. There is an upward trend from last year, where the overall attrition has gone up by 0.7%, from 12.6% to 13.3%, indicating that organizations are facing greater talent crunch in the form of voluntary separation.

From a retention standpoint, R&D and sales professional across levels, continue to challenge organizations, while hiring, organizations find it hard to attract R&D professionals as well as sales professionals, especially in the life sciences industries. Ruchika Pal, Principal & India TRS Product Leader, Mercer said, “The research ecosystem in India presents a significant opportunity for multinational corporations. Several MNCs have shifted or are shifting their research and development (R&D) base to India. These R&D bases either develop products to serve the local market or help the parent company overseas deliver a new innovative generation of products faster to the markets across the world. There is also an increase in R&D spends by Indian pharmaceutical companies towards having more global roles in R&D centers in India. All this is driving R&D jobs to be rated as hot-jobs in India- tough to hire and retain!”  

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