6 in 10 Indian employers to deploy AI to improve reward systems

According to the report by EY India, employers are increasingly turning to AI to streamline processes like salary bench-marking, real-time pay equity analysis, and creating customisable employee benefits

Mumbai: Six out of 10 employers in India are looking to explore the potential of artificial intelligence (AI) to improve employee reward systems in the coming three years, a new report said on Thursday. This comes as businesses face a rapidly evolving job market, driven by technological advancements and shifting employee expectations.

According to the report by EY India, the biggest change is the growing role of AI in shaping employee compensation. Employers are increasingly turning to AI to streamline processes like salary bench-marking, real-time pay equity analysis, and creating customisable employee benefits. The shift is expected to move from traditional pay models to AI-driven analytics by 2028, the report added.

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Through AI-powered platforms, companies are now able to offer more personalised benefits and ensure pay equity across different employee groups. “While salary increments remain steady, organisations must go beyond traditional pay structures to attract and retain top talent in the near future,” Abhishek Sen, Partner and Leader, Total Rewards, HR Technology and Learning, People Consulting, EY India said.

In addition, the report said blockchain technology is emerging as a tool to help companies with secure, transparent, and automated payroll systems, particularly for cross-border compensation. India’s workforce can expect an average salary increase of 9.4 per cent in 2025.

At the same time, employee attrition, or the rate at which employees leave companies, has seen a slight improvement, decreasing from 18.3 per cent in 2023 to 17.5 per cent in 2024. When it comes to sector-specific salary trends, the report highlighted that industries like e-commerce, financial services, and Global Capability Centres (GCCs) are seeing the highest salary growth.

E-commerce is expected to lead the way with a salary increase of 10.5 per cent in 2025, driven by the rise of digital commerce and increasing consumer spending. The financial services sector is also expected to experience a salary boost of 10.3 per cent, while GCCs are projected to see a 10.2 per cent increase in salaries. In addition to competitive salaries, employees are now placing high importance on flexibility.

The report shows that 90 per cent of employees are working in hybrid setups, combining both in-office and remote work. Half of the employers surveyed also reported increasing interest in gig and temporary roles. Companies that offer flexible working hours and remote work options are more likely to attract and retain talent, the report said.