Six in ten Indian employers plan to integrate artificial intelligence (AI) into employee reward systems over the next three years, an EY India report reveals on Thursday.
As businesses adapt to a changing job market, AI is set to reshape compensation structures. Employers are leveraging AI for salary benchmarking, real-time pay equity analysis, and personalized benefits. By 2028, AI-driven analytics could replace traditional pay models, ensuring fair and customized rewards for employees.
“While salary increments remain steady, companies must rethink pay structures to attract and retain top talent,” said Abhishek Sen, Partner at EY India. Blockchain is also emerging as a tool for secure, transparent payrolls, especially for cross-border payments. The report projects an average salary increase of 9.4 percent in 2025.
Attrition rates have slightly improved, declining from 18.3 percent in 2023 to 17.5 percent in 2024. Meanwhile, e-commerce, financial services, and Global Capability Centres (GCCs) are expected to see the highest salary growth. E-commerce leads with a projected 10.5 percent increase in 2025, followed by financial services at 10.3 percent and GCCs at 10.2 percent.
Flexibility is now a key factor for employees. The report found that 90 percent of the workforce operates in hybrid models, and employers report growing interest in gig and temporary roles. Companies offering flexible work arrangements are more likely to attract and retain talent in the evolving job market.
