NEW DELHI, February 20, 2013 - Aon Hewitt, the global human resource consulting and outsourcing business of Aon plc (NYSE:AON), announced today the results of the 17th edition of the Annual Salary Increase Survey. Reflecting the growth expectations of 5%, India Inc. projects an average salary increase of 10.3% for 2013.

The study shows a wide variance of salary increases across sectors. Financial services, Technology, Outsourcing have seen the greatest volatility and remain cautious in 2013. Consumer & Industrial sectors which so far have been resilient, also reported conservative increase projections.

Sandeep Chaudhary, Partner - Talent & Rewards at Aon Hewitt India commented: “In sync with the economic outlook,10.3% increase is among the lowest the country has seen in a decade (barring the subprime crisis year). Though business sentiment is strengthening on account of inflation reaching a three year low and stock markets rising upwards, the cautious streak is evident in the projected salary increase numbers”.

In recent years there is a shift in the way increments are managed in organizations. With shrinking salary budgets, organisations are creating sharp differentiation in salary increases between their key talent and the rest of the population. Over the years this gap is widening. This year, key talent (Hi-Potentials, Hi-Performers & Critical Talent) is projected to get an average increase of 14.1%.

Sandeep added, “Cost consciousness and performance orientation are the key themes this year. Organizations are looking at compensation and productivity together and hence closely evaluating the return on compensation spent”.

Despite a year in which India’s growth came to a decade low, corporate India reported an average overall attrition of 19.3% for 2012. With a growing recognition that key talent is a sustainable competitive advantage, organisations are reshaping their strategies to safeguard this talent group. This is also reflected in the lower average attrition number for key talent at 5.7%.

Industry Outlook

Pharmaceutical industry in India, with a 3-year CAGR of 12.4% and projected CAGR of 15.3% is a front runner in salary increase amongst all sectors with 13.5% projections for 2013. Backed by growth in allied sectors such as medical devices, medical technology and medical tourism the overall healthcare and life sciences sector also reported the highest salary increase average at 13.1%.

Riding on the back of increasing demand and changing consumer preferences, the FMCG sector has been topping the charts on salary increases for the last 5 years. The projections for this year stand at 12.3%.

Automotive sector in India took a hit in FY2012 in terms of growth given the ever rising fuel costs, production cuts and temporary plant shutdowns. However, the salary increase projections for 2013 at 11% are above the India Inc. average. Lowered from actual increase of 12.8% in 2012.

Driven by macroeconomic and sector-specific challenges such as delays in clearances, lack of funds and projects getting postponed, the Infrastructure sector is projecting relatively lower salary increase at 6.1%.

The Financial industry is still far from a full recovery. For 2013 the financial industry average salary increase projection stands at 8% with Securities closing in at 6.6%, Banking at 8%, and Life insurance at 8.7%.

The Telecom industry, challenged by myriad business and regulatory issues continues to lag the Salary Increase space with projections for 2013 at 9.6%.

Hi-Tech Industry posted an average salary increase of 10.5%. Margin compression, a cautious outlook in terms of the global economic state and large bench strength have led to IT service organisations projecting a conservative salary increase of 9.6%. On the other hand, IT Product organisations, fuelled by growth opportunities in the domestic market and greater penetration in Tier 2 cities posted relatively higher salary increase of 11.2%. A dip in sales for consumer devices, coupled with a shift to smarter devices and tablets has dampened the mood for the semiconductor industry which has reported a salary increase of 11.3%. Down from 12.1% in 2012.

In the face of considerable global uncertainty, the Indian ITeS industry can be described as truly resilient. The sector projects an average increase of 10.1% for 2013. BFSI captives and other captives are projecting salary increase at 10.2%. Third party service providers on account of tough global economic conditions, depreciating rupee and huge cost pressures on the other hand posted an average salary increase of 8.9%. Organisations are looking at various ways to rationalize wage costs and improve utilization and productivity, with a view to sustain desired business performance.

Sandeep Chaudhary added, “Wage inflation will be a high pressure point for sectors where wage cost is a significant part of operating expenses and revenues. Sectors where wage cost is relatively a small ticket item, the minimum fair pay increase will remain strong”.

Other Trends from the Study

A majority of organisations (93%) made a bonus payout in 2012. However, organisations reported reduction in quantum of variable pay awards. This is one of the strategies being adopted to contain costs and ensure a tighter alignment to performance. While companies have not reverted to reducing coverage and eligibility of employees receiving variable pay awards, they are definitely re-examining the measures and metrics used to assess performance, ensuring strong linkage between individual performance and payout.

About Aon Hewitt’s Salary Increase Survey

Aon Hewitt surveyed over 500 organizations representing 20 primary and 30 secondary industry sectors. , This is the most comprehensive research in the area of rewards and performance. The study measures actual and projected salary increases, and compensation practices for five specific job categories, namely top/senior management, middle management, junior manager/professional/ supervisor, general staff, and manual workforce. The data for the survey was collected over December 2012 – January 2013

About Aon Hewitt

Aon Hewitt is the global leader in human resource consulting and outsourcing solutions. The company partners with organizations to solve their most complex benefits, talent and related financial challenges, and improve business performance. Aon Hewitt designs, implements, communicates and administers a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies. With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and their employees. For more information on Aon Hewitt, please visit www.aonhewitt.com/india.

About Aon

Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 65,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon’s global partnership and shirt sponsorship with Manchester United.

Annexures

Media Contact:
Sushil Bhasin
+91 9810068426
sushil.bhasin@aonhewitt.com