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. As reported by Aon, stable salary budgets are enabling a more targeted approach to pay, with employers increasingly focused on where investment can deliver the greatest workforce and business value. "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.
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%. The projected salary increase of 9.1% for 2027 is broadly stable compared with the actual 9% increase in 2026, reflecting continued resilience in compensation budgets despite geopolitical uncertainty and global trade risks.
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. According to the survey, sector-wise data show that attrition remains particularly high in financial services, with NBFCs recording 37% attrition 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%. The increase suggests competition for talent remains strong despite broadly stable salary budgets.
AI adoption and demand for specialized skills have grown significantly, with talent premiums for AI, machine learning and data science roles increasing by approximately 10% from 2025. Adoption of AI productivity tools rose from 46.1% in 2025 to 56% in 2026, with usage increasing across every job cluster measured. Around 60% of employers are prioritising upskilling of employees, while investment in agentic AI and demand for AI skills continue to grow. "The rapid adoption of AI signals a shift from experimentation to enterprise-wide application," Chaudhary said, adding that employers must translate this momentum into measurable productivity and growth. "The next priority is translating that momentum into measurable productivity and growth. Employers that establish credible baselines, identify the capabilities that create differentiated value and align workforce investment accordingly will be best placed to realise AI's full potential," he emphasized.
Employers are preparing for the cost implications of the Wage Code implementation. 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% due to Wage Code compliance. "Progress on Wage Code readiness is encouraging, but compliance is only the first step," said Amit Kumar Otwani, Associate Partner, Talent Solutions, India, Aon. He emphasized that employers need to assess workforce and cost implications, 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.
