Salary increases across corporate India are expected to average 9.1 per cent in 2026, with global capability centres (GCCs) leading the gains as companies sharpen pay differentiation and place a growing premium on scarce digital skills, according to a report by EY India.
GCCs are projected to post the highest salary increments at about 10.4 per cent, followed by financial services at around 10 per cent and e-commerce at 9.9 per cent, an EY report showed. Life sciences and pharmaceuticals are expected to see increases of roughly 9.7 per cent.
The report signals a decisive shift in how companies reward employees, with skills increasingly outweighing tenure or role. Premiums for capabilities such as artificial intelligence, machine learning, cybersecurity and cloud computing have risen to 30-40 per cent.
Performance-linked pay is also becoming more pronounced. Top performers can earn up to 1.6 times more than average peers through targeted rewards, while variable pay as a share of fixed compensation climbed to 16.1 per cent in 2025 from 14.8 per cent a year earlier.
Attrition across India Inc eased to 16.4 per cent in 2025 from 17.5 per cent in 2024, suggesting a gradual cooling in the post-pandemic job churn. More than 80 per cent of exits remained voluntary, indicating opportunity-led movement rather than restructuring. Financial services reported the highest attrition at 24 per cent, while GCCs stood out for relative stability at 14.1 per cent.
As companies adopt artificial intelligence at scale, compensation models are being redesigned to reflect productivity and measurable business impact. About half of large firms now use analytics in compensation planning, while the use of AI in rewards and learning functions has tripled over the past few years, the report said.
Nearly half of surveyed organisations are shifting toward skills-based pay frameworks, and emerging technology roles can command skill-based premiums of up to 40 per cent. Quarterly variable pay cycles are also gaining ground, particularly in sales roles, while more firms are linking a portion of leadership incentives to environmental, social and governance metrics.
Long-term incentives are increasingly used as retention tools, with employee stock ownership plans the most common instrument. Adoption of such plans rose to about 78 per cent in 2025, and GCCs and technology-led firms are extending eligibility beyond senior leadership to individual contributors with critical skills.
At the top end, median chief executive pay at Nifty 200 companies reached about Rs 7-9 crore in 2025, up 12-15 per cent from a year earlier, with nearly half of total compensation tied to long-term incentives, underscoring the growing emphasis on performance-linked rewards.
The report also noted that impending labour code changes and measures in the Union Budget 2026 are prompting companies to revisit wage structures and payroll systems, adding another layer of complexity to India’s evolving pay landscape. |
