According to a report by the audit and consulting firm Deloitte, the average raise for Indian corporations is expected to decrease from 9.4% in 2022 to 9.1% in 2023, as alary hikes are around the corner.
According to the study, the IT sector, which is dealing with customer spending reductions, would experience the worst price increases in ten years.
The impact of the recession on advanced economies will reduce attrition in the IT sector from 19.7% last year to pre-covid levels of 15-16%.
“The IT sector is estimated to get the lowest hike of a decade led by IT product firms and digital e-commerce companies,” said Anandorup Ghose, partner, Deloitte India.
Delotte's India Talent Outlook 2023
Delotte India's India Talent Outlook 2023 projects a 9.1% salary increase in the IT sector, down from the actual 10.3% increase of the previous year. The expected increases for IT were 10.5% in 2022, compared to a 10% increase roughly ten years ago.
“Stubborn inflation, higher interest rates, and a slowing economy are likely to make organisations more cautious this year. We expect increments and attrition to witness lower trends in 2023,” said Ghose.
After nearly a year of hiring frenzy fueled by strong demand for IT workers across industries, the IT sector is now under pressure from a squeeze at its international clients and a significant banking crisis in the west. Due to "over-hiring," multinational tech companies have fired a significant number of workers. The Indian tech industry is also affected by the domino effect.
Sector with highest increments
According to the Deloitte report, which primarily drew information from 300 organisations' HR heads across 25 sectors, the Life Sciences and Manufacturing sectors will experience the largest increases in 2023. Both are anticipated to implement 9.5% increases compared to a real increase of 9.7% last year.
According to Ghose, the Life Sciences sector was substantially unscathed by the epidemic and is still unaffected by the recession.
The Deloitte Study also mentions India Inc.'s lack of visibility of skill sets required to switch business models or advance professionally. According to the report, 42% of organisations don't regularly change their structure to adapt it to shifting business requirements.
In industries like IT and IT services, there is a defined way to upgrade the workforce. However, in other industries, such capabilities are learnt on the job and not well-defined. According to Ghose, this could pose a challenge when companies want to change their business models like they did after the pandemic, as there was there was a demand and supply gap in talent.
It is outlined how to upgrade the workforce in sectors like IT and IT services. However, these skills are not well-defined and are instead learned on the job in other areas. Ghose asserts that because there was a skills shortage, it might be difficult for businesses to modify their business strategies as they did following the epidemic.
Only 19% of businesses, particularly in the IT, ITeS, and consumer sectors, stated that their staff members are aware of their skills outside of their current responsibilities.
