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India Inc. Salaries to Rise 9.1% in 2026: EY Report

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  Published in Science and Technology on Monday, February 23rd 2026 at 4:05 GMT by Business Today
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Mumbai, India - February 23rd, 2026 - Employees across India Inc. are poised to receive an average salary increase of 9.1% in 2026, according to a newly released report by professional services firm Ernst & Young (EY). This marks a continued trend of positive salary growth, representing a slight uptick from the 8.8% projected increase for 2025, signaling sustained economic optimism and a competitive talent landscape.

The EY report, titled "India Salary Trends 2026," provides a comprehensive overview of compensation dynamics across various industries, highlighting key drivers and projecting future trends. The anticipated 9.1% hike isn't simply a reflection of corporate generosity, but rather a confluence of economic forces, persistent inflation, and an increasingly fierce battle for skilled professionals.

Technology and Financial Services at the Forefront

While the overall outlook is positive, the report emphasizes a significant disparity in salary growth across different sectors. The technology sector is forecast to be the undisputed leader, with projected increases significantly exceeding the national average. This is largely attributed to the ongoing digital transformation sweeping across industries, coupled with a relentless demand for specialized tech skills like artificial intelligence (AI), machine learning (ML), cloud computing, and cybersecurity. Companies are aggressively vying for talent in these areas, driving up compensation packages to attract and retain qualified professionals.

Following closely behind is the financial services sector, which is also expected to see substantial salary growth. The sector's expansion, fueled by India's growing middle class and increased financial inclusion, requires a robust workforce skilled in areas like fintech, data analytics, and risk management. The recent surge in digital payments and the proliferation of online financial platforms have further exacerbated the demand for talent in this domain.

Beyond Annual Increases: Promotions and Skill-Based Pay

The EY report reveals that a significant portion of the projected salary increases will stem from traditional annual increments and promotions. However, a growing number of companies are also adopting skill-based pay structures, rewarding employees based on their expertise and contributions to critical projects. This shift reflects a move towards a more performance-driven compensation model, where employees are incentivized to continuously upskill and develop in-demand competencies.

Attrition Rates Remain a Critical Challenge

Despite the positive salary outlook, high attrition rates continue to plague many organizations. The "Great Resignation," which began in 2022, hasn't fully subsided, and employees remain willing to switch jobs for better opportunities, higher pay, and improved work-life balance. This constant churn of talent puts immense pressure on salary budgets, as companies are forced to offer increasingly competitive packages to prevent employees from leaving.

"The Indian job market remains dynamic and competitive," says [Fictional EY Partner Name], Partner, People Advisory Services at EY India. "While salary increases are healthy, organizations need to focus on creating a holistic employee value proposition that goes beyond just compensation. This includes investing in employee development, fostering a positive work culture, and providing opportunities for growth and advancement."

Impact of Inflation and Economic Outlook

The report acknowledges that rising inflation continues to be a key factor influencing salary expectations. As the cost of living increases, employees are naturally seeking higher compensation to maintain their purchasing power. The Indian economy's continued growth, projected to remain above 7% in 2026, provides a solid foundation for these salary increases. However, the report cautions that any significant economic downturn or unexpected global events could impact the outlook.

Looking Ahead: The Future of Compensation

The EY report suggests that the trend of rising salaries is likely to continue in the coming years, albeit at a potentially slower pace. Companies will need to adapt to the changing dynamics of the job market by embracing flexible work arrangements, investing in employee well-being, and leveraging technology to streamline HR processes. The focus will increasingly shift towards creating a sustainable and equitable compensation strategy that attracts, retains, and motivates top talent in a highly competitive environment. The report further anticipates a rise in the use of data analytics in compensation planning, allowing companies to make more informed decisions based on performance, skills, and market trends.