India Inc Projects 9.1% Salary Hike in 2026: EY Pay Report
GCC in India are expected to offer the highest increments at 10.4 per cent, driven by strong global demand for digital and technology capabilities, according to the latest Future of Pay report by EY India.
Corporate India is poised for a significant compensation shift in 2026, with average salary increments projected at 9.1%, according to EY India’s Future of Pay report. This marks a continuation of robust wage growth trends, though with sharper sectoral variations and a decisive tilt toward skills-based pay frameworks.
At the forefront of this surge are Global Capability Centres (GCCs), expected to deliver the highest increments at 10.4%, underscoring their pivotal role in India’s evolving corporate ecosystem. GCCs, which serve as strategic hubs for multinational corporations, are riding a wave of global demand for digital, technology, and analytics capabilities. Their compensation strategies reflect not only competitive pressures but also the need to retain scarce talent in areas such as AI, cybersecurity, and cloud computing.
Sectoral Breakdown: Who’s Paying More?
The report highlights clear sectoral winners in the salary race:
| Sector | Projected Salary Hike (2026) | Key Drivers |
|---|---|---|
| GCCs | 10.4% | Global demand for digital & tech skills |
| Financial Services | ~10% | Expansion in fintech, risk, compliance |
| E-commerce | 9.9% | Consumer demand, digital retail growth |
| Life Sciences & Pharma | 9.7% | R&D investments, global supply chain resilience |
| Overall India Inc | 9.1% | Broad-based growth, skills premium |
Financial services remain a strong contender, with 10% average hikes, driven by fintech innovation, regulatory compliance needs, and the war for risk management talent. E-commerce follows closely at 9.9%, buoyed by digital retail expansion and logistics transformation. Life sciences and pharmaceuticals, at 9.7%, reflect India’s growing role in global healthcare supply chains and R&D investments.
Attrition Trends: Cooling but Still Voluntary
The Future of Pay report also signals a gradual cooling in attrition levels. Overall attrition fell to 16.4% in 2025, down from 17.5% in 2024, suggesting a more stable job market. Yet, the story beneath the numbers is nuanced:
Voluntary exits still account for over 80% of attrition, indicating employees are actively seeking better opportunities rather than being forced out.
- Financial services recorded the highest attrition at 24%, reflecting intense competition for specialized talent.
- Professional services and hi-tech/IT sectors also saw elevated churn.
- GCCs, in contrast, reported relatively lower attrition at 14.1%, showcasing their ability to retain talent through competitive pay and career pathways.
This divergence underscores the importance of employee experience, career mobility, and skills-based recognition in retention strategies.
The Rise of Skills-Based Compensation
Perhaps the most transformative insight from the report is the shift from role-based to skills-based pay structures. Nearly 50% of surveyed organisations are moving toward frameworks that reward specific, high-demand skills rather than traditional job titles.
Professionals with expertise in:
- Artificial Intelligence (AI)
- Generative AI
- Machine Learning (ML)
- Cybersecurity
- Cloud Computing
can command salary premiums of 30–40%, reflecting their criticality to business growth and digital transformation.
This signals a paradigm shift: compensation is no longer anchored solely in hierarchy or tenure but in capability and impact. For HR leaders, this requires rethinking workforce planning, career architecture, and learning investments.
Variable Pay Gains Momentum
Another notable trend is the rise of variable pay as a share of total compensation. The average variable pay component increased to 16.1% of fixed salary in 2025, up from 14.8% in 2024.
This reflects employers’ growing preference for performance-linked rewards, aligning pay with business outcomes. For employees, it introduces both opportunity and uncertainty—greater earning potential tied to results, but also heightened pressure to deliver.
Expert Insights: Beyond Annual Increments
Abhishek Sen, Partner and Leader, Total Rewards, HR Technology and Learning at EY India, contextualizes the findings:
“The future of pay is no longer just about the size of annual increments but about identifying the right skills to reward and balancing competitiveness with long-term sustainability.”
This perspective highlights the strategic recalibration of compensation. Organisations are not merely chasing market benchmarks; they are designing pay structures that:
- Reward scarce skills
- Support sustainable cost models
- Enhance retention through career pathways
Global Implications: India as a Talent Hub
For global HR leaders, India’s compensation trends carry broader implications:
- GCCs as strategic anchors: With increments outpacing other sectors, GCCs reinforce India’s position as a global talent hub for digital and technology services.
- Skills premiums as global benchmarks: The 30–40% salary premium for AI and cybersecurity skills in India mirrors global trends, suggesting convergence in pay structures across geographies.
- Attrition dynamics as a cautionary tale: Even with cooling attrition, voluntary exits dominate, reminding employers worldwide that employee engagement and career growth remain critical retention levers.
Editorial Analysis: What HR Leaders Must Watch
As India Inc prepares for 2026, HR leaders should focus on three strategic imperatives:
Embed Skills-Based Pay
- Transition from role-based frameworks to skills-based models.
- Build transparent skill taxonomies and reward mechanisms.
- Align learning investments with compensation strategies.
Balance Fixed and Variable Pay
- Use variable pay to drive performance alignment.
- Ensure fairness and transparency in incentive structures.
- Communicate clearly to avoid employee anxiety over pay volatility.
Reimagine Retention Strategies
- Address voluntary attrition with career mobility programs.
- Invest in employee experience and well-being.
- Leverage GCC-style models of competitive pay and global exposure.
Conclusion: The Future of Pay is Skills-First
India’s projected 9.1% salary hike in 2026 is more than a statistic—it is a signal of transformation. GCCs, financial services, and e-commerce are setting the pace, but the real disruptor is the rise of skills-based compensation.
For HR leaders, the challenge is clear: design pay structures that reward the right skills, balance competitiveness with sustainability, and retain talent in a market where voluntary exits remain high.
The Future of Pay is not just about increments—it is about strategic alignment of skills, pay, and performance in a rapidly evolving global economy. For further insights into the evolving workplace paradigm, visit
