The EY Future of Pay 2025 report highlights a slowdown in salary growth within the IT and IT-enabled services sectors, driven by automation, cost optimization, and reduced hiring. Conversely, global capability centres (GCCs) are expected to experience higher salary increments, underscoring their growing role in India’s employment landscape. Salary Trends in IT and IT-enabled Services The report projects that salary increments in the IT sector will decline from 9.8% in 2024 to 9.6% in 2025. Similarly, IT-enabled services will see a moderate decrease from 9.2% to 9%. The slowdown is attributed to increasing automation, operational efficiency measures, and reduced hiring patterns across the sector. Organizations are focusing on cost optimization by leveraging AI-driven tools and outsourcing models, leading to moderated salary growth. On the other hand, GCCs are expected to witness a rise in salary hikes from 10.0% in 2024 to 10.2% in 2025. These centres, which serve as offshore hubs for multinational corporations, continue to expand their operations, driving demand for skilled professionals and ensuring competitive compensation trends. Industry-wide Salary Growth Projections India Inc is projected to witness an average salary increase of 9.4% in 2025, slightly lower than the 9.6% recorded in 2024. Employee attrition rates have also shown a decline, dropping from 18.3% in 2023 to 17.5% in 2024. The steady compensation growth across industries indicates a balanced yet competitive employment market. Among all sectors, the e-commerce industry is expected to lead salary increments, with projected growth of 10.5% in 2025. The rapid expansion of digital commerce, rising consumer spending, and continuous technological advancements are the key drivers behind this growth. Following e-commerce, the financial services sector is expected to see a salary increment of 10.3%, driven by the increasing demand for fintech specialists, digital banking professionals, and cybersecurity experts. The rise in digital banking adoption and the need for enhanced security measures have fuelled salary hikes within this domain. Meanwhile, sectors such as automotive, pharmaceutical, and manufacturing are maintaining steady compensation trends. However, other industries display varied salary growth patterns, with specific sectors poised for significant increments based on technological advancements and market demand. AI-driven Compensation Trends A significant transformation in salary structuring is being witnessed with the integration of AI-driven tools. According to the EY report, 60% of employers plan to implement AI technologies for salary benchmarking, real-time pay equity analysis, and customizable employee benefits. This shift is expected to revolutionize traditional compensation models by 2028. Organizations are increasingly moving away from manual pay benchmarking and fixed incentive models, opting instead for AI-powered predictive analytics and real-time salary adjustments. AI-enabled compensation platforms are being used to personalize benefits, optimize reward structures, and ensure equitable pay across workforce demographics. Additionally, blockchain and smart contracts are emerging as tools for secure, transparent, and automated payroll processing, particularly for cross-border payments. These technologies provide organizations with an efficient and error-free payroll mechanism, reducing compliance risks and enhancing financial transparency. The Future of Employee Compensation and Upskilling As salary increments remain steady, organizations must go beyond traditional pay structures to attract and retain top talent. Commenting on the findings, Abhishek Sen, Partner and Leader, Total Rewards, HR Technology and Learning, People Consulting, EY India, stated, “Flexibility and financial security are becoming core drivers of employee satisfaction. Companies must innovate their compensation strategies to stay competitive in the evolving job market.” Another key trend shaping the employment landscape is AI-powered upskilling. Companies are heavily investing in AI-driven learning platforms that offer highly customized training modules, equipping employees with in-demand skills for evolving roles. This strategic focus on continuous learning enhances workforce adaptability and career growth opportunities. Furthermore, the growing demand for AI talent is reshaping hiring patterns. Organizations are prioritizing professionals with expertise in AI-related roles, such as machine learning, prompt engineering, and data science. As employees anticipate AI’s transformative impact on their career paths, the need for continuous upskilling and adaptability is becoming increasingly critical.