Indian companies are gearing up for a robust salary hike in 2026, with projections pointing to an average increase of 9.1 percent across the corporate sector. Leading the charge are Global Capability Centers (GCCs), expected to see even steeper rises up to 10.4 percent, driven by surging global demand for digital and technology expertise.
The latest ‘Future of Pay’ report from EY India highlights how GCCs are becoming the epicenter of talent wars. Financial services won’t lag far behind, with anticipated hikes around 10 percent, followed closely by e-commerce at 9.9 percent and life sciences plus pharmaceuticals at 9.7 percent. These sectors are betting big on skilled professionals to fuel growth in a competitive landscape.
Employee attrition is finally showing signs of stabilization. The rate dipped to 16.4 percent in 2025 from 17.5 percent the previous year, signaling a more settled job market. Yet, over 80 percent of departures are voluntary, as workers chase better opportunities rather than fleeing layoffs.
Financial services recorded the highest churn at 24 percent, with professional services and high-tech IT sectors also facing elevated turnover. In contrast, GCCs boast a healthier 14.1 percent attrition rate, underscoring their appeal in retaining top talent.
Abhishek Sen, Partner and Leader for Total Rewards, HR Technology, and Learning at EY India, emphasizes a strategic shift. ‘The future of pay isn’t just about the size of annual increments,’ he notes. ‘It’s about rewarding the right skills while balancing competition and long-term sustainability.’
A major trend is the pivot to skills-based pay structures. Nearly half of surveyed companies are ditching traditional role-based compensation for skill-centric models. Experts in AI, generative AI, machine learning, cybersecurity, and cloud computing could command 30-40 percent premiums, as these competencies drive business expansion.
Variable pay is also gaining ground, rising to 16.1 percent of total compensation in 2025 from 14.8 percent a year earlier. This performance-linked approach reflects companies’ focus on aligning rewards with outcomes in an era of rapid technological change.