Intense Competition, Talent Crunch Push Companies to Hand Out 15-20% Pay Hikes

Indian employees have never had it so good. Intense competition and rising attrition levels are forcing companies to hand out 15-20% mid-term salary hikes. Reliance Industries, Marico and Dabur have offered mid-term increments and out-of-turn hikes of 15-20% to top performers in recent months. This is over and above the 15-20% salary hikes handed out during annual appraisals last year. This comes at a time when India Inc. is desperately trying to hold back talent, especially in telecom, IT, BPO and retail. A massive recruitment spree in sunrise sectors like BPO, telecom and retail has led to a demand-supply mismatch and mid-term hikes going up to 40%. Average attrition rates in IT have moved up to 22% from 18% and those in BPOs to 50% from 46%. In the manufacturing sector, talent exodus is averaging 8-12%. Several corporates are even offering bonuses and increments on a quarterly basis to top teams. An HR head said, "Although it is a short-term reaction, we have to react proactively to the market scenario and retain our performers. If one loses an employee, the average time taken for a new person to pick up the skills is up to six months, which is critical time lost for a company. Also, replacement costs like hiring consultants would in any case add up to a huge expense and a lot of pressure on HR," said Dabur India HR chief. Company are identifying people who may be tempted to leave and are devising ways of retaining such talent – offering learning and development facilities for freshers, sending them abroad on one-year bonds (for six-months postings), etc