How sustainable practices can drive inclusive growth in modern business

Evolving talent trends necessitates innovative total rewards strategies, focusing on workplace flexibility, upskilling and digitization. 

In brief

• Global economy faces moderated growth, marked by recovery efforts, geopolitical tensions, and inflation concerns.
• Attrition rates are  influenced by macroeconomic factors. A downward trend is observed in attrition as compared to previous years.
  
• Evolving total rewards are influenced by AI, gig economy, and corporate strategies emphasizing diversity,  equity, and inclusion.

In 2024, the global economy faces moderated growth amid recovery efforts, geopolitical tensions, and inflation concerns. According to the Organization for Economic Cooperation and Development (OECD's) November 2023 report, global growth is projected to slow from 3.3% in 2022 to 2.7% in 2024, marking the slowest pace since the financial crisis, excluding the pandemic's onset. 

After a challenging 2022, the Private Equity and Venture Capital (PE/VC) landscape in 2023 remained turbulent. The year observed notable shifts and adaptations in investment strategies, a blend of sectoral re-allocations, strong build-up in dry powder, the downturn in the startup segment. The trends indicate the constantly evolving strategies adapted by the funds in a response to every changing market dynamic.

Despite these challenges, India emerges as a growth leader, with a projected GDP growth of 6.3% for FY24. India played a pivotal role in the G20, and is navigating inflation head-on, contributing significantly to global expansion amidst tough global conditions¹.

In the face of these developments, the EY Future of Pay 2024 report navigates India's economic trajectory through the lens of talent trends, attrition and retention strategies shaping the market outlook. The report provides a comprehensive analysis of compensation trends, incentive programs, and the impact of new-age benefits on employee well-being within the Indian context, helping organizations enhance workforce engagement and secure a competitive edge in the talent market.

India is highly optimistic 

Sectors in India will experience significant growth across various industries. India is set to become a leading foreign investment hub, surpassing China's growth forecast and expected to be the world's third-largest economy by 20272. The country's aggressive renewable energy targets and booming electric vehicle market are expected to significantly contribute to its GDP and manufacturing prowess. Investments in capital goods and infrastructure are poised to drive economic growth, with a particular focus on enhancing urban centers. Meanwhile, the healthcare and pharmaceutical sectors are forecasted to see substantial growth, with the hospital sector and MedTech industry set to expand their global footprint by 2025. Additionally, Technology and Innovation in sectors like financial technology, education technology, agritech and Global Capability Centers (GCCs) are gaining momentum and are driven by technological advancements, changing consumer behaviors, and evolving business models.

Indian workplaces are transforming 

As of 2023, there has been a notable shift in talent trends in India towards meeting the evolving expectations of employees in the post-pandemic era. The focus is primarily on workplace flexibility, with an increasing demand for hybrid work models that promise improved work-life balance and productivity. In the technology sector, 35%- 40% of the technology workforce is made up of digital talent. This gap is projected to widen by 2028 due to increased demand for expertise in AI, Big Data, and cloud computing. Over 80% of Learning and Development (L&D) professionals believe that reskilling current employees is deemed more cost-effective than hiring new ones, underscoring the increasingly strategic role of learning and development.  

Employee attrition rate is declining

Attrition rates in India across sectors have been fluctuating, influenced by a combination of macroeconomic factors, global economic conditions, and internal corporate strategies. A cautious sentiment has emerged, characterized by a moderated pace of hiring and a reduction in salary increments by 1% to 2%. 

According to the EY Future of Pay report, sectors like financial services, professional services, IT and ecommerce are seeing employee turnover rates surpass 20%, ranking them among the sectors with the highest attrition.

Attrition rates exhibited indications of slowing down, bolstered by an improved availability of talent. Strategic recruitment adjustments are anticipated to result in fewer job opportunities and a potential increase in involuntary attrition due to rightsizing efforts.

Steady salary hike projected for 2024  

In 2022, growth was notable in sub-sectors like Cloud Platforms and Consumer Tech, yet all tech sub-sectors are expected to decline by 2024, likely due to market saturation post-rapid digital transformation.

E-Commerce, after peaking at 14.2% in 2022, is projected to fall to 10.9% by 2024, possibly due to pandemic-induced shifts in consumer behavior or heightened online competition.

Professional services are forecasted to rebound from 9.7% in 2023 to 10% in 2024 as companies invest in post-pandemic strategy alignment or navigate global business complexities. The financial sector shows a slight growth decline from 2023 to 2024, signaling potential headwinds or consolidation post-previous growth phases.

Businesses may embrace AI and gig economy in 2024

Total rewards are evolving due to tech and socio-economic shifts, with AI and automation driving personalized benefits and data-driven compensation through HR technology solutions. The gig economy's rise, backed by skill development initiatives, impacts India's economy. Corporate strategies now emphasize DE&I and ESG reporting. Companies revamp rewards to meet diverse workforce needs, focusing on flexibility, fairness, and globalization. Skill-based pay and comprehensive wellness programs including employee rewards and recognition plans, target employee retention and engagement, ensuring organizational success.