60% of Indian Employers to Use AI for Salary Benchmarking and Employee Rewards by 2028 | EY Report

AI is transforming salary benchmarking and compensation strategies. Top companies like Amazon, Google, Microsoft, and JPMorgan Chase are using AI-driven insights to ensure real-time pay adjustments, predictive salary analysis, and personalized compensation. With AI adoption expected to grow by 60% by 2028, businesses across sectors—e-commerce, financial services, IT, and GCCs—are integrating AI to optimize salaries. This blog explores rank-wise industry salary hikes, AI-based pay structures, and future trends in compensation.

Mar 13, 2025 - 12:02

Updated: 8 days ago

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60% of Indian Employers to Use AI for Salary Benchmarking and Employee Rewards by 2028 | EY Report

Quick answer: According to the EY Future of Pay 2025 report cited in the post, around 60% of Indian employers plan to use AI for salary benchmarking and rewards by 2028, and an average salary increase of 9.4% is expected in 2026. AI tools can give real-time pay data, but fairness and transparency still need human oversight.

Key takeaways

The 60% figure comes from an EY report cited in the post, so check the report before quoting it.
AI benchmarking still needs HR review for fairness.
Avoid feeding personal pay data into public AI tools.

Introduction
Why Are Companies Using AI for Salary Benchmarking?
Which Companies Are Using AI for Salary Benchmarking?
Real-World Scenario: AI in Salary Adjustments
Industry Trends: AI-Driven Salary Growth (2025 Projections)
Changing Employee Priorities: AI-Driven Flexibility and Rewards
CEO Compensation Trends: AI’s Role in Executive Pay
Future of AI in Salary and Compensation (2025-2028)
Conclusion: AI is Reshaping Compensation Strategies

Introduction

Artificial Intelligence (AI) is revolutionizing how businesses handle salary benchmarking, employee rewards, and compensation strategies. According to the EY Future of Pay 2025 report, around 60% of Indian employers plan to integrate AI into these processes by 2028.

With an average salary increase of 9.4% expected in 2026, companies are moving beyond traditional pay models. AI-driven compensation tools now enable real-time pay adjustments, predictive analytics, and personalized incentives, ensuring fair and competitive salaries for employees.

In this blog, we’ll explore how AI is transforming salary decisions, which global companies are leading the charge, and the future of AI-driven compensation.

Why Are Companies Using AI for Salary Benchmarking?

Traditional salary benchmarking was slow, manual, and often outdated by the time pay adjustments were made. AI is changing the game by offering real-time, data-driven compensation models that align with market trends.

Key Benefits of AI in Salary Benchmarking:

Real-Time Pay Adjustments – AI monitors job market trends and suggests salary changes instantly.
Personalized Compensation – AI tailors salaries and benefits to individual employee skills and performance.
Pay Equity & Fairness – AI detects and removes biases in salary structures, ensuring equal pay for similar roles.
Predictive Insights – AI forecasts future salary trends, helping companies plan ahead for pay raises.

Which Companies Are Using AI for Salary Benchmarking?

Amazon – AI-powered payroll & workforce optimization

Amazon uses machine learning algorithms to optimize employee salaries and automate workforce management. AI helps Amazon adjust wages based on job roles, performance metrics, and location-based pay scales.

Google – AI-driven pay equity analysis

Google has implemented AI-powered tools to analyze gender and racial pay gaps. The company uses AI to ensure equal pay for equal work and adjust salaries based on industry benchmarks.

Microsoft – AI-powered performance-based compensation

Microsoft employs AI for real-time salary adjustments and personalized employee rewards. AI helps determine bonuses, promotions, and salary hikes based on performance metrics and industry trends.

Tesla – AI-driven incentive structures

Tesla uses AI to analyze employee performance and productivity, ensuring competitive pay structures. AI helps identify top talent and offers stock-based incentives to retain employees.

JPMorgan Chase – AI for financial sector compensation

JPMorgan Chase utilizes AI to predict salary trends and personalize financial incentives for employees. AI-driven data analytics optimize bonuses, stock options, and retirement benefits.

Infosys & TCS (Indian IT Giants) – AI-powered workforce analytics

Leading Indian IT firms Infosys and TCS use AI to analyze market salaries and upskill employees based on future job trends. AI also helps retention strategies by predicting attrition risks.

Real-World Scenario: AI in Salary Adjustments

Case Study: A Tech Firm Uses AI to Reduce Employee Turnover

A global IT company was struggling with high employee attrition due to non-competitive salaries. Manual benchmarking took months, causing delays in salary adjustments.

How AI Helped:

AI-based salary benchmarking compared salaries with real-time market data from LinkedIn, Glassdoor, and job postings.
Personalized pay raises were suggested for high-risk employees before they resigned.
Performance-based compensation was assigned automatically using AI-driven insights.

Impact:

30% drop in employee attrition
Salary adjustments completed in real-time instead of quarterly reviews
Higher job satisfaction and engagement

Industry Trends: AI-Driven Salary Growth (2025 Projections)

E-Commerce & Financial Services Leading Salary Growth

E-commerce salaries are projected to increase by 10.5% in 2026, driven by the rise in digital commerce and AI-powered automation.
Financial services (banking, fintech) will see a 10.3% hike, fueled by demand for cybersecurity experts and AI-driven banking solutions.

AI in IT & Global Capability Centers (GCCs)

Global Capability Centers (GCCs) will witness 10.2% salary growth in 2026, as companies expand AI investments.
IT services salaries will see slower growth, declining from 9.8% in 2024 to 9.6% in 2026, due to automation and cost-cutting.

Changing Employee Priorities: AI-Driven Flexibility and Rewards

90% of employees prefer hybrid work models – AI helps companies design flexible compensation structures.
50% of employers report a rise in gig and freelance work – AI-driven pay platforms help manage variable salaries.
65% of companies believe flexible work options improve talent acquisition – AI helps match pay with remote work models.

Stock-Based Incentives & AI-Driven Compensation

Stock-based incentives (ESOPs, RSUs, SARs) have increased from 63% in 2020 to 75% in 2024.
AI helps personalize stock compensation based on employee tenure, role, and performance.

CEO Compensation Trends: AI’s Role in Executive Pay

Performance-Linked CEO Salaries

CEO salaries in Nifty50 companies surged by 18-20% from 2023 to 2024.
70% of CEO pay is now linked to business growth, ESG goals, and long-term sustainability.

AI-Driven Leadership Selection

AI helps companies analyze CEO performance across industries, ensuring better executive hiring decisions.
40-45% of CEO transitions in the last five years have been internal promotions, optimized by AI-driven career tracking.

Future of AI in Salary and Compensation (2025-2028)

AI-Powered Salary Predictions

AI will enable continuous salary adjustments instead of annual raises.
AI will help companies predict talent shortages and adjust salaries to stay competitive.

Blockchain & Smart Contracts for Payroll

AI & blockchain will automate cross-border payments, reducing delays and fraud.
Smart contracts will ensure instant payroll processing, especially for freelancers and gig workers.

AI-Based Upskilling & Compensation

AI-driven learning platforms will recommend pay raises based on skill development.
Employees will get incentives for completing AI-recommended training programs.

Conclusion: AI is Reshaping Compensation Strategies

AI is revolutionizing salary benchmarking, pay structures, and employee benefits. Companies using AI retain top talent, ensure pay equity, and optimize compensation decisions in real-time.

With AI adoption growing, businesses that embrace smart compensation strategies will have a competitive edge in the evolving job market.

What Do You Think?

Do you believe AI will improve salary fairness in the workplace? Share your thoughts in the comments!

Frequently Asked Questions

AI-driven salary benchmarking uses artificial intelligence to analyze market trends, employee skills, and industry standards to determine competitive salaries.

AI helps companies adjust salaries in real time, eliminate pay gaps, and personalize compensation based on employee performance and job roles.

Indian employers are adopting AI to improve pay transparency, optimize salary structures, and offer better rewards to attract and retain talent.

According to the EY Future of Pay 2025 report, 60% of Indian employers plan to use AI for salary benchmarking and compensation strategies by 2028.

AI analyzes salary data across different demographics to identify and eliminate unfair pay gaps based on gender, experience, and location.

The e-commerce sector is expected to see a 10.5% salary increase, followed by financial services at 10.3% and global capability centers (GCCs) at 10.2%.

AI will not replace HR professionals but will assist them by providing data-driven insights, automating repetitive tasks, and improving decision-making.

AI considers employee performance, skill level, job market trends, and company goals to offer customized salary and benefits packages.

AI helps companies identify employees at risk of leaving and offers proactive salary adjustments, bonuses, or career development plans to retain them.

Companies like Amazon, Google, Microsoft, Tesla, JPMorgan Chase, Infosys, and TCS use AI to optimize employee compensation.

AI-driven salary predictions help businesses offer competitive raises, with high-growth sectors like e-commerce and fintech seeing the most significant increases.

Real-time pay adjustment uses AI to track market trends and employee performance to update salaries instantly instead of waiting for annual reviews.

AI optimizes salary budgets by ensuring fair pay structures, preventing overpayment, and aligning salaries with industry standards.

AI is influencing CEO pay by linking 70% of executive compensation to business growth, ESG goals, and company performance.

AI helps companies design stock-based compensation plans like ESOPs and RSUs by predicting employee performance and retention rates.

AI platforms help manage gig worker payments by calculating fair wages based on work type, experience, and market demand.

Startups use AI to stay competitive by setting fair salaries based on real-time industry trends without needing large HR teams.

AI eliminates human bias by using objective data to determine salaries, ensuring fair pay for all employees.

Predictive salary analytics use AI to forecast future salary trends, helping businesses plan compensation budgets more effectively.

AI-driven automation is slowing salary growth in IT, with increments dropping from 9.8% in 2024 to 9.6% in 2026 due to efficiency-focused hiring.

Companies may face challenges like data privacy concerns, AI bias, integration issues, and resistance to technology adoption.

AI-driven learning platforms recommend salary increases based on employee skill development and training completion.

AI analyzes employee contributions and assigns performance-based salary increases, bonuses, and promotions.

HR leaders use AI to access real-time salary benchmarks, predict employee needs, and create data-backed compensation strategies.

AI simplifies international salary payments by automating currency conversion, tax calculations, and compliance checks.

AI-driven salary adjustments, fair pay structures, and personalized rewards lead to higher job satisfaction and engagement.

AI analyzes economic conditions, industry shifts, and talent demand to predict future salary hikes and hiring costs.

AI adoption in salary benchmarking will increase, with companies shifting from manual pay models to AI-driven real-time compensation strategies.

AI will continue to enhance salary decisions by integrating with blockchain for secure payroll, automating real-time pay adjustments, and improving employee rewards.

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Vaishnavi

Vaishnavi is a skilled tech professional at the Ethical Hacking Training Institute in Pune, responsible for managing and optimizing the technical infrastructure that supports advanced cybersecurity education. With deep expertise in network security, backend operations, and system performance, she ensures that practical labs, online modules, and assessments run smoothly and securely. Her behind-the-scenes contributions play a vital role in delivering a seamless and secure learning experience for aspiring ethical hackers.