Mumbai, Oct. 21 -- India Inc is bracing for muted salary hikes in 2027 as rising costs, geopolitical uncertainty and a sluggish job market squeeze compensation budgets, with bigger rewards likely to be reserved for top performers, according to hiring experts. Higher crude oil prices amid the West Asia conflict, inflation that surged to a two-year high in September, the Reserve Bank of India's rate increase and changing attrition trends are converging to complicate salary decisions. With consumer demand under pressure and businesses becoming more cautious about spending, companies are likely to exercise greater discipline in compensation budgets, even as they compete to retain critical talent. Consulting firms Deloitte and WTW (Willis Towers Watson) expect average salary increases to remain flat in 2027. Aon, meanwhile, projects nominal salary hikes of 9.1%, broadly in line with 2026, and real wage growth, adjusted for inflation, of 5.1%, from 4.3% in 2026. In banking, salary increases could average 6-7% in FY27, down from 8-9% in FY26, according to recruitment firm ABC Consultants. Employers typically roll out annual increments in April-May, though some do so a few months later. Work on salary hikes, promotions and bonuses, however, has already begun. Higher crude oil prices linked to the West Asia conflict are pushing up input costs and weighing on companies' investment appetite. A subdued festive season, which runs from September to December and peaks around Diwali, adds to the concerns. "Three forces are converging: cost pressure from geopolitical conflict, attrition falling across every industry, and more Indian professionals returning home than leaving. Put together, they point to one outcome, which is that average salary increases in 2027 will flatline," said Nitin Razdan, partner and human capital consulting leader for Deloitte South Asia. Razdan also told Mint that one trend in 2027 could be "one-time bonuses replacing permanent salary hikes", as companies seek to reward employees without committing to higher fixed costs. Consumers facing tighter budgets are delaying big-ticket purchases, with the effects likely to be felt over the coming quarters by companies in fast-moving consumer goods (FMCG), retail, e-commerce, logistics and other consumer-dependent industries. The information technology industry, too, reported a muted second quarter. Average salary increases peaked in 2022, when high attrition and the acceleration of digital adoption after the pandemic pushed companies to compete aggressively for talent. Since then, the employment market has seen ups and downs. According to Aon, attrition stood at around 18% in 2026, down from 21.4% in 2022. Employees in non-banking financial companies are projected to lead salary growth in 2027, with hikes of 10.1%, followed by energy at 9.9% and real estate and infrastructure at 9.8%. Recruiters, however, caution that these projections may be optimistic. "Inflationary pressures are likely to drive greater cost discipline across BFSI. Banking will see role rationalisation at senior and mid levels, particularly in operational and low-end tech roles. Salary increments are expected to average around 6-7%, compared with 8-9% in FY26, skewed towards top performers," said Upasana Agarwal, partner, professional and financial services at recruitment firm ABC Consultants. Top performers, particularly those with AI skills, are still likely to command better rewards. Consulting firm WTW (Willis Towers Watson) said companies continue to differentiate compensation, directing higher investments towards employees with in-demand skills and critical talent....