Salary increments are likely to improve relatively, albeit conservatively in 2010, compared to the single-digit hikes seen across hierarchies, functions and performance levels last year

Driven by scarcity of talent and increasing competition, India Inc is expected to hike salaries in the New Year with the pharmaceutical, telecom and consumer goods companies leading the space with up to 12% pay hike, says global consultancy Ernst & Young (E&Y).

E&Y, in a survey, said that salary increments are likely to improve relatively, albeit conservatively in 2010, compared to the single-digit hikes seen across hierarchies, functions and performance levels last year.

"In spite of all the excitement, actual salary increases will be somewhat conservative with salary increases in the IT and technology firms to be around 8% with pharmaceutical and consumer goods companies leading the space with forecast increments of around 10-12%," E&Y partner and global leader (HR advisory) NS Rajan told PTI.

The telecom growth story would continue in 2010 with an above-average salary hike expected in the sector, Mr Rajan added. Other sectors which would continue to battle the talent war due to the crunch include energy, power and real estate.

India Inc's overall salary increase for 2010 is forecast to be between 9% and 12%, according to the survey.

Meanwhile, adversely hit by rupee-dollar fluctuations and the global slowdown, export-oriented sectors like IT/ IT-enabled services and textiles would tread cautiously. The IT sector is likely to give increments in single digits, which will be perceived to be conservative as compared to the hike forecast for other sectors, Mr Rajan said.

Moreover, after months of rigorous cost-cutting and recruitment freeze or job cuts in some cases, companies in most sectors look forward to increase their headcount in the next few months as well.

"Majority of the firms in the pharmaceutical, chemical, auto/auto components, insurance, education, retail and IT sectors will lead hiring in 2010," Mr Rajan said, adding that however, the pace of hiring may not be back to the 2007 levels for the majority of these sectors.

E&Y believes that insurance would be a bulk hiring sector as the country is largely under-insured. Moreover, the retail sector will also be talking big numbers with respect to hiring with majority of the retail chains looking to add close to 1,000 people annually.

Other sectors which may face a manpower crunch in the coming months include auto/auto components, healthcare and education.

According to official statistics, the education sector faces a shortage of 8,00,000 teachers in the primary and upper primary schools and over the next 10 years, secondary schools would have to recruit 5,00,000 teachers.