Intense Competition, Talent Crunch Push Companies to Hand Out 15-20% Pay Hikes
Indian employees have never had it so good. Intense competition and rising attrition levels are forcing companies to hand out 15-20% mid-term salary hikes. Reliance Industries, Marico and Dabur have offered mid-term increments and out-of-turn hikes of 15-20% to top performers in recent months. This is over and above the 15-20% salary hikes handed out during annual appraisals last year. This comes at a time when India Inc. is desperately trying to hold back talent, especially in telecom, IT, BPO and retail. A massive recruitment spree in sunrise sectors like BPO, telecom and retail has led to a demand-supply mismatch and mid-term hikes going up to 40%. Average attrition rates in IT have moved up to 22% from 18% and those in BPOs to 50% from 46%. In the manufacturing sector, talent exodus is averaging 8-12%. Several corporates are even offering bonuses and increments on a quarterly basis to top teams. An HR head said, “Although it is a short-term reaction, we have to react proactively to the market scenario and retain our performers. If one loses an employee, the average time taken for a new person to pick up the skills is up to six months, which is critical time lost for a company. Also, replacement costs like hiring consultants would in any case add up to a huge expense and a lot of pressure on HR,” said Dabur India HR chief. Company are identifying people who may be tempted to leave and are devising ways of retaining such talent – offering learning and development facilities for freshers, sending them abroad on one-year bonds (for six-months postings), etc
The hike comes at a time when India Inc. is desperately trying to
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Hold back talent, especially in telecom, IT, BPO and retail
Option (1) Hold back the growth and sustainability, especially in telecom, IT, BPO and retail — Incorrect. No company tries to hold back its own growth. The hikes are meant to support it.
Option (2) Hold back innovation, especially in telecom, IT, BPO and retail — Incorrect. The passage is about people leaving, not about innovation.
Option (3) Hold back talent, especially in telecom, IT, BPO and retail — Correct. Attrition, the rate at which employees leave, was rising. Companies gave mid-term pay hikes to hold back their talent, that is, to keep good employees from leaving. Retaining staff is part of the staffing function.
Option (4) Hold back challenges, especially in telecom, IT, BPO and retail — Incorrect. Challenges are not “held back”; the phrase has no meaning here.
Note: The passage is the NCERT case study ‘Intense Competition, Talent Crunch Push Companies to Hand Out 15-20% Pay Hikes’, which has been reproduced by NTA in the exam. NCERT (2026-27 Edition): “Indian employees have never had it so good. Intense competition and rising attrition levels are forcing companies to hand out 15-20% mid-term salary hikes. Reliance Industries, Marico and Dabur have offered mid-term increments and out-of-turn hikes of 15-20% to top performers in recent months. This is over and above the 15-20% salary hikes handed out during annual appraisals last year. This comes at a time when India Inc. is desperately trying to hold back talent, especially in telecom, IT, BPO and retail.” |