Salary increment Survey 2017-18: KPMG report

This appraisal season has proved to be delightful for those working in the e-commerce sector as they are the ones who have taken home the highest salary increment, as per a recent survey conducted by one of the big 4 consulting firms, KPMG. Theyconducted the survey among 263 companies from different industry verticals/sectors.

Salary increment Survey 2017-18 KPMG report - Chakreview

Salary increment Survey 2017-18 KPMG report – Chakreview

E-commerce gets highest increment

The KPMG Annual Compensation Trends Survey said that e-commerce employees received an average hike of 12.5% for the financial year 2017-2018 although this sector also accounted for the highest voluntary attrition rate at 20.4%.

The attrition rate was a result of three main reasons:

  • Better pay offered by other companies
  • Better career options/job opportunities
  • Personal reasons such as health issues or marriage

According to the partner-in-charge at Heidrick & Struggles, Mr. Venkat Shastry, the e-commerce space is currently witnessing slow funding, reorganization of its top management, and coalition. For the next two to three quarters, e-commerce companies would be looking for leadership tactics to connect with the customers at a better level, high retention of its top talent and attracting huge investments for acquiring more talent for the leadership positions.

For employee retention, companies used many compensation levelers however; most of the organizations used these three:

  • Performance-based variable (19.7 per cent companies used it to retain employees)
  • Recognition awards (13.1%)
  • Retention bonus (11.8%).


Logistics record the Lowest Increment

At 8.1 per cent, logistics this year has been given the lowest increment whereas the banking and finance sector has witnessed the highest dip in appraisals with their last year’s increment figure of 9.7 per cent falling to 8.2 per cent this year.

Banking and Financial services 

The biggest dip, however, was in the banking and financial services industry with its salary appraisals falling from 9.7 per cent to 8.1 percent. This sector also recorded the highest variable pay of 20.7 per cent.

“This indicates that organizations are continuing to move towards paying for performance and variable pay holding a higher percentage in the cost-to-company,” the survey report said.

The average increment across sectors

Compared to 2016-2017, the average projected increment has seen a minor dip whereas the average projected variable pay across different sectors has seen a marginal improvement.

In 2016-2017, the job industry recorded the average projected increment at 10.3 per cent, however, for the year 2017-18, it has fallen to 9.7 per cent, noticing a dip of 0.6 per cent from the last year.  In comparison to the last year, the average projected variable pay has seen an increase of 0.4 per cent and currently, it stands at 15.4 per cent.

E-commerce will continue to grow in India

Apart from the highest increment rate, e-commerce also accounts for another good news i.e., its positive estimated growth.

Currently, China accounts for the largest e-commerce market in the world, followed closely by the US. However, India is the fastest growing e-commerce market globally with its expected growth to reach 64 billion USD by year 2021 with a five-year CAGR of 31.2 per cent.

Though despite this phenomenal growth, it is going to be a long time before India would be able to take over China in terms of retail online growth. Satish Meena, Forecast Analyst at Forrester Research, said that China’s market is at a mature stage whereas India would take a decade to reach there. “About 70 percent of our population still lives in tier III cities and beyond. Our customer is different: they will evolve at their own pace, in the next 10 years, with more disposable income,” he said.

He further explained, “Comparatively, Internet and e-commerce penetration is still small in India, so is population and total retail. So it is unfair to compare China and India. We will not grow fast enough to take over China.”

Talking about the profitability of the three major players in the India e-commerce market, Satish shared his views and said,“Currently, Amazon is the only one in good shape.  Once Flipkart and Snapdeal raise decent funding, they will promote themselves more without huge discounts. It is still too early to claim profitability. Only a bigger market can bring profitability.”

A bigger market for e-commerce means their expansion, which would further result in more job opportunities, therefore, in the coming years, we can assume that the competition to work at e-commerce firms would further increase and only high performing individuals would be required to fit the bill.

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