Women Workforce
Employees walk out of a building at the Indian headquarters of iGate in the southern Indian city of Bangalore. [Representational Image]reuters

Domestic companies are expected to hand out an average salary hike of 10.8% to their employees in 2016 even as they become less optimistic over growth prospects, according to a consulting firm.

However, a spike in inflation will eat into a significant part of the salary hike, said the firm.

"India is expected to see an overall projected salary increase of 10.8%. Factoring inflation at 6.1%, the net salary increase in 2016 is expected to be marginally higher at 4.7% as against 4.5% last year, when inflation was at 5.9%," said Nasdaq-listed professional services firm Towers Watson.

The expected salary hike would come about despite a bearish mood among nearly 58% of the Indian companies about their business growth, Towers Watson said in its report titled "2015-16 Asia-Pacific Salary Budget Planning Report."

"Employers may be bearish in thinking there is a weak business outlook given the current poor market data, but the case is the opposite for employees, who hold bullish expectations for salary rises. Employers will need to carefully manage employees' longer term expectations, if they are to achieve a content workforce," Business Standard quoted Sambhav Rakyan, Data Services practice leader Asia Pacific at Towers Watson, as saying.

The "top performers" are likely to see an average hike of 12.5%, while "above average" and "average" performers could receive 11% and 9.7%, respectively.

Employees in the energy sector are expected to get the highest salary hike in 2016 at 11.5%. Pay hike in high tech and financial services sectors is likely to 10.7% and 10.4%, respectively.

Also read