Here’s what Indian Inc. is projecting for salary increment, promotions, attrition rates, talent development in 2026

According to the Deloitte report, March to April is the performance review period for many employees in India and average salary increases are expected to remain steady at around 9% this year, with moderate variation across sectors.

According to Deloitte India Talent Outlook 2026, “Against a resilient macroeconomic environment and sector-specific growth dynamics, salary growth budgets across India Inc. are expected to remain flat in 2026.”

How much of a pay raise might employees see?

The findings showed that companies project average wage growth of 9.1% in 2026, compared to 9% last year. The overall goal balances “the need to retain critical talent with a strong push for productivity and cost discipline,” he added.

Among industries, financial services and manufacturing are pursuing relatively higher wage increases to support growth and resulting hiring needs. On the other hand, technology companies are being cautious; Both product and service sector players are reducing their forecasts for 2026 by 10-70 basis points compared to the previous year.

Employees of consumer sector companies are in a marginally better position, with expected salary increases of around 40 basis points; According to the findings, life sciences and pharmaceutical companies are forecasting an increase of about 10% this year; This rate is among the highest increases on average.

What criteria do companies use to apply wage increases?

The report noted that overall, salary increases remain stable and organizations “continue to reward high performers and critical skills more aggressively, sharpening the bell curve.”

Anandorup Ghose, Partner, Deloitte India, said: “The last few years have seen most organizations reverting to operating within a narrow range of salary increases each year.” This means that those at the top of the curve receive the largest portion in support of their performance and incentivize future contributions.

The survey found that the share of employees with the highest ratings on the five-point performance scale fell 300 basis points, from 10% in 2024 to 7% in 2025. Meanwhile, approximately 16% of the workforce is now categorized in the bottom two performance ratings.

“Decisions around talent and rewards have changed as employees and companies operate in a buyer’s market across most skill categories. There is a much greater focus on improving productivity and ensuring effective and directed skills spending,” Ghose added.

Promotion rates are increasing, but so is attrition

According to the report, while the proportion of top-performing employees decreased, the proportion of promoted employees increased from 12% in 2024 to 14% in 2025. Here too, higher levels of growth were observed in production and operational intensive organizations.

Notably, promotion rates are now nearly double that of top-rated performers. This means companies reward current top performers and future potential. But he cautioned that organizations must carefully balance this approach to avoid long-term title and title inflation.

Regarding attrition, the findings showed that figures increased by 17.6% in 2025, compared to 17.4% in 2024. However, he noted that the increase did not reflect a significant uptick in hiring activity and attributed it to an “increase in involuntary attrition”, i.e. recent layoffs across sectors.

“Companies are not responding with proportionately higher increases, indicating that the labor market has stabilized. The supply of talent has also improved, with a broader pool emerging from Tier-2 and Tier-3 cities and stronger campus recruiting pipelines,” the report said.

Skills-based approach to talent development, adoption of digital

The report also added that organizations are rapidly adopting a skills-based approach to talent development and competency frameworks are now widely institutionalised. It was noted that around 75% of companies have both behavioral and technical competency frameworks, and these are increasingly integrated into performance management.

Additionally, the learning operating model has shifted to a digital mode where virtual learning now accounts for almost 70% of educational delivery. But they acknowledged that face-to-face learning has greater results.

In terms of challenges, although accessibility and scale issues have been resolved, structural challenges remain. Top challenges include assessing skills gaps and keeping up with rapidly evolving technologies, balancing business priorities with learning time, and measuring the impact of learning initiatives.

Here, nearly 60% of companies reported assessing skills gaps and keeping up with rapidly evolving technologies as the most important question.