Indian companies are projected to raise salaries by 9.1% in 2027, marginally higher than the 9% increase in 2026, as employers balance talent retention with cost pressures, according to Aon's Annual Salary Increase and Turnover Survey for India 2026-27. The survey, which covered more than 1,200 organisations across 45 industries, found that employee attrition rose to 18% in 2026 from 16.2% in 2025, highlighting continued competition for talent despite broadly stable pay budgets.
Non-banking financial companies (NBFCs) are expected to lead salary increases in 2027 at 10.1%, followed by energy at 9.9% and real estate and infrastructure at 9.8%. Funds and asset management and life sciences are projected to see increases of 9.6% each, while global capability centres (GCCs) are expected to offer 9.4%.
At the other end, technology consulting and services firms are projected to record the lowest increase among the sectors surveyed, at 6.6%, unchanged from 2026. Banking is expected to see salary increases of 8.5%, compared with 8.6% in 2026, while chemicals are projected at 8%, down from 8.1%.
Real estate and infrastructure, which recorded a 10.3% increase in 2026, is projected to see a moderation to 9.8% in 2027. Automotive and vehicle manufacturing is expected to see increases ease to 9.5% from 9.7%.
industry. Non-banking financial companies are projected to lead salary growth in 2027 at 10.1%, followed by energy at 9.9% and real estate and infrastructure at 9.8%.
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“Strong domestic consumption, sustained investment and export growth continue to support business confidence, allowing employers to invest in talent while maintaining cost discipline,” said Roopank Chaudhary, Partner & Rewards Consulting Leader, Talent Solutions, India, Aon. “
Stable salary budgets are enabling a more targeted approach to pay. A modest rise in non-merit adjustments, particularly in manufacturing and technology, reflects greater focus on market alignment, scarce skills and critical talent. Employers are increasingly focused not only on how much they spend, but where that investment can deliver the greatest workforce and business value.”
Attrition climbs as competition for talent persists
Overall attrition increased to 18% in 2026 from 16.2% in 2025 and 17.1% in 2024, reversing the improvement recorded last year. Involuntary attrition — employee exits initiated by employers — also rose to 4% from 3.4% in 2025, adding complexity to workforce planning, the survey found.
Sector-wise data show that attrition remains particularly high in financial services. NBFCs recorded attrition of 37% in 2026, up from 36% in 2025, while life insurance recorded 51.6%, compared with 51.7% a year earlier. Retail attrition rose to 20.5% from 19%, while real estate and infrastructure saw attrition increase to 21.7% from 17.4%.
Banking attrition edged up to 22% from 21.2%. In contrast, attrition in technology consulting and services remained unchanged at 18.4%, while technology platform and products saw it ease to 13.8% from 14%.
“Stable salary budgets are enabling a more targeted approach to pay. A modest rise in non-merit adjustments, particularly in manufacturing and technology, reflects greater focus on market alignment, scarce skills and critical talent,” said Roopank Chaudhary, Partner and Rewards Consulting Leader, Talent Solutions, India, Aon.
Most companies expect revenue growth above 5%
Business sentiment remains positive, with 60% of companies expecting revenue growth of more than 5% in 2026-27, according to the survey. However, only 37% anticipate double-digit growth. At the same time, 62% of companies are budgeting salary increases above 9%, indicating that pay expectations remain resilient.
The survey also estimates real wage growth — salary increases adjusted for inflation — at 5.1% in 2027, compared with 4.3% in 2026. While headline salary increases remain close to 9%, inflation and rupee depreciation could affect the real value of these increases, particularly when compared with earnings in other markets.
AI skills and productivity reshape workforce spending
Employers are increasingly directing workforce investment towards skills and productivity as artificial intelligence becomes more widely used in the workplace. Established adoption of AI productivity tools increased to 56% in 2026 from 46.1% in 2025, with usage rising across every job cluster measured by the survey.
Around 60% of employers are prioritising employee upskilling. Meanwhile, talent premiums for roles in artificial intelligence, machine learning and data science have increased by approximately 10% from 2025, reflecting demand for specialised capabilities.
“The rapid adoption of AI signals a shift from experimentation to enterprise-wide application. The next priority is translating that momentum into measurable productivity and growth,” Chaudhary said.
Wage Code compliance could add to costs
Employers are also preparing for the cost implications of the Wage Code. According to Aon, 65.4% of employers are already compliant, while another 20.9% expect to be ready within six months. However, 42.8% anticipate payroll cost increases of at least 1%.
Aon said employers need to assess the impact on workforce costs, align changes to cost to company with their rewards philosophy, and communicate the transition clearly to employees.
With salary increments, retention pressures, AI investment and Wage Code-related costs converging, companies are likely to focus increasingly on allocating pay budgets to critical roles and scarce skills rather than distributing increases uniformly across the workforce.