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India's 2026 Salary Hike at 9.1%; GCCs Lead with 10.4% Growth

India's overall salary increments are projected to moderate slightly to 9.1% in 2026, according to the EY Future of Pay report. Global Capability Centers (GCCs) are set to lead this growth with a 10.4% hike, driven by global demand and digital skill scarcity. The compensation landscape is shifting, with variable pay increasing and a sharper focus on performance-led rewards, especially for AI and digital roles. Organizations are moving away from uniform adjustments, instead deploying targeted pay corrections and skill premiums.

Key Points: India 2026 Salary Hike 9.1%, GCCs Lead Growth: EY Report

  • 2026 salary hike projected at 9.1%
  • GCCs lead growth at 10.4%
  • Variable pay becoming more significant
  • AI roles command premium rewards
  • Pay-for-performance outcomes sharpening
2 min read

India's salary hike projected at 9.1% in 2026; GCCs lead with 10.4%: EY Future Pay report

EY report projects India's 2026 salary increments at 9.1%. GCCs lead with 10.4% hikes. AI roles and variable pay gain prominence.

"GCC salary increments remain structurally elevated, supported by sustained global demand and skill scarcity - EY Future of Pay report"

New Delhi, February 23

India's corporate landscape is reported to moderate with overall salary increments projected at 9.1 per cent in 2026. This follows a marginal softening from the 9.3 per cent recorded in 2025, according to the EY Future of Pay report.

Global Capability Centers (GCCs) are set to lead salary growth in 2026 with projected increments of 10.4 per cent, reflecting sustained global demand and investment in specialised digital capabilities.

Financial Services follows closely at around 10 per cent, with E-commerce at 9.9 per cent and Lifesciences and Pharmaceuticals at 9.7 per cent, rounding out the high-growth sectors.

The report highlights that GCC salary increments remain "structurally elevated, supported by sustained global demand and skill scarcity, positioning GCCs as the strongest salary growth segment," in the country.

"Engineering, Manufacturing, Automotive and Infrastructure sectors continue to moderate, with increments trending below prior years, reflecting cautious capex cycles, utilisation pressures and tighter margin discipline," the report noted.

Organisations are increasingly shifting away from "one-rate" adjustments. In 2026, employers are holding salary budgets steady while "sharpening differentiation by deploying targeted pay corrections, skill premiums and performance-led rewards."

AI and digital roles continue to pull ahead, pushing firms to refresh job architecture. According to the report, the gap in rewards is becoming more pronounced, with an "outstanding performer" receiving 1.5 to 1.6 times the increment of those who simply meet expectations.

Variable pay is also becoming a more significant component of the total compensation package. Average variable payout as a percentage of total fixed pay increased to 16.1 per cent in 2025, up from 14.8 per cent in 2024.

The report data shows a "deliberate shift toward higher at-risk pay" across levels. For instance, variable pay for Executives (CXOs) reached 27.5 per cent in 2025, while Individual Contributors saw an average of 11 per cent.

"Payout dispersion widened in 2025, with top performers earning 120% to 150% of the target, while average performers received 60% to 80%, sharpening pay-for-performance outcomes," the report said.

Additionally, new metrics are entering the compensation framework, with 35 per cent of large organisations incorporating "ESG-linked KPIs in leadership variable pay."

The top challenges facing rewards management include attracting and retaining talent in a competitive market and managing workforce redesign due to AI and automation. To address these, firms are using "pulse surveys and analytics to guide targeted reward investments" and ensure a "strong link between performance, impact and pay outcomes."

- ANI

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Reader Comments

A
Arjun K
Good to see GCCs leading. It shows India's talent is truly global. But what about inflation? A 9.1% hike sounds nice, but if inflation is around 5-6%, the real increase is much smaller. We need to look at purchasing power, not just percentages.
R
Rohit P
The focus on variable pay is a double-edged sword. For sales and target-driven roles it makes sense, but for stable functions, a higher fixed component gives more security. Hope companies don't use this as an excuse to reduce base salaries.
S
Sarah B
Interesting to see ESG-linked KPIs entering the compensation framework. It's a positive step if it genuinely drives responsible business practices and isn't just a tick-box exercise. The report gives a very corporate view; I'd like to see how this translates for SMEs and startups.
V
Vikram M
The engineering and manufacturing sectors moderating is concerning. These are core sectors for job creation. If capex cycles are cautious, it might affect fresh graduate hiring. The government should look into incentives to boost these traditional industries alongside digital.
K
Kavya N
As someone in the lifesciences sector, the 9.7% projection is reassuring! The skill scarcity mentioned is real – companies are really fighting for good talent in R&D and regulatory affairs. The shift to performance-based pay is clear in our annual reviews too.

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