The biggest worry faced by Indian companies over the past five years has been employing and retaining talent. Employees knew this, which is one reason why India saw salary hikes that put the rest of the world to shame.
Is the party over now?
A new survey by human resources consulting firm Hewitt Associates shows that the rate of salary increases is already slowing— from an average 15.2% this year to an estimated 13.9% in 2009. And we may have to live with single-digit salary increases by 2012, Hewitt says.
The other interesting thing is that the fattest pay hikes have not been going to top management in 2007 and 2008. Middle management and junior employees walked away with the best deals. This tells us a lot on where labour shortages are most severe.
An economic slowdown, high inflation, increasing use of variable pay—all is not well in cubicle land.