In the upcoming performance appraisal season in India, startup employees will be the happiest.
Salaries at early stage companies are estimated to rise 15.6% in 2016, according to a recent survey by Aon Hewitt, a human resources firm. This is the highest rise among all sectors in India. The survey covers over 700 companies across 19 industries.
Huge amounts of funding and the need for specialists have pushed up salaries in the startup ecosystem, according to Anandorup Ghose, partner, talent and rewards, Aon Hewitt.
“This is a business necessity where these startups need specialised people and do not have an option of not paying. It is also cyclical. In 1999-2000, when the insurance industry was on the rise in India, it saw similar increases. Same was the case with the telecom industry in the mid 2000s,” Ghose told Quartz.
“The salaries in early stage companies and e-commerce firms will increase for a while now, but then will settle down.”
On the other hand, sectors such as cement, telecom, and transportation and logistics will see muted growth in salaries.
On an average, Indians will see a 10.3% growth in salaries in 2016. This is the highest among Asia-Pacific countries. “Companies in India are still willing to afford the largest pay increases across Asia and most of the world, in spite of reduced inflation numbers,” Aon Hewitt said in the report.
Meanwhile, Indians are also changing jobs at a slower pace. The current attrition rate of 16.3% is the lowest since the financial crisis of 2009.
“Attrition is closely related to business activity in the country,” Ghose explained. When there is more activity, attrition is higher because there are new businesses and, in turn, new jobs. Right now, the economy is not in a phase where business activity is high. Hence, the low attrition rates, he said.