The global AI market is projected to have a revenue of more than $2 trillion in 2031, with the Asia Pacific region poised to contribute 24% to this growth. Within the region, China, India and Japan are forecasted to lead this change. This means that organisations operating in Asia Pacific can expect AI to be part of their operations, which may affect their demand for talent and pay practices.
Aside from strong projections on AI, the demand for digital talent is also growing. Across the region, the overall number of digital talent headcount rose by 14%, according to our 2023-2024 WTW Tech, Media and Gaming Compensation Survey Report. The uptick came largely from India, the Philippines, South Korea and China. (Figure 1).
Headcount for digital talent rose 19% in India as the country is becoming one of the largest hubs for IT and AI services. Meanwhile, the business process outsourcing (BPO) and AI initiatives in the Philippines and South Korea are driving 12% increase in digital talent headcount change.
Moreover, the Tech, Media and Gaming (TMG) sector, which employs the highest number of digital talent in the region, has increasingly stable attrition rates. Voluntary attrition rates dropped in several countries including China, Singapore and Vietnam. Also, TMG organisations in half of the countries in Asia Pacific plan to either maintain or increase their salary budgets in 2025 as compared to 2024 (Figure 2).
| 2024 Salary Increase Rate P50 | 2025P Salary Increase Rate P50 | 2024 TGC Movement | |
|---|---|---|---|
| AUS | 3.8% | 3.7% | 5.6% |
| CHN | 5.1% | 5.0% | 2.0% |
| HKG | 3.9% | 4.0% | 3.6% |
| IND | 9.3% | 9.0% | 5.4% |
| IDN | 6.0% | 5.6% | 5.8% |
| JPN | 3.0% | 3.4% | 0.4% |
| MAL | 4.8% | 5.0% | -3.9% |
| PHL | 5.5% | 5.4% | 6.7% |
| SGP | 4.0% | 4.0% | 4.2% |
| SKR | 4.3% | 4.5% | 3.9% |
| TWN | 3.9% | 4.0% | 1.5% |
| THA | 4.8% | 4.9% | 3.9% |
| VNM | 7.4% | 7.0% | 2.8% |
Source: 2023-2024 APAC WTW Tech, Media and Gaming Compensation Survey Report, same companies, average survey grade 08-14; 2024 July Edition WTW Salary Budgeting Survey
Malaysia stands out, however, as post-pandemic rightsizing and economic uncertainty led to slight decreases in total guaranteed compensation (TGC) in some job grades and modest increases in others. Meanwhile, TGC movement is upward in Indonesia and in the Philippines due to the strong market for digital services, which has surpassed the current supply of talent. This has led to wage increases, as companies compete within a limited talent pool. The shortage of talent is particularly evident in specialised areas such as software development, data science and IT infrastructure. Organisations are also exploring international talent, where they must offer compensation packages that are at par with global standards.
Compensation for digital talent has also been observed to be robust in China, Japan and India. In China, the TGC movement for an AI expert at P4 level rose from 8% in 2023 to 18% in 2024, indicating that companies aim to secure top talent for AI initiatives. Meanwhile, TMG companies in Japan are allocating more resources toward software development, with an aim to achieve pay equity for the lowest 10% of earners. In India, compensation growth appears to be strong for niche digital skills, like cloud computing and full stack development, as the current demand outpaces supply.
Most organisations, as part of their annual pay review process, benchmark their policies and pay competitiveness against the market. Subsequently, subject to their financial strength, they aim to allocate salary increase budgets to reach their desired market pay position. While this still remains a good practice, ever increasing criticality of the AI roles for the business and the related costs calls for companies to take on a more comprehensive approach. This will not only align them with their desired market position, but also review effectiveness of their rewards programmes.
According to recent WTW research on Pay strategy and effectiveness, there are six prevailing pay programmes objectives:
The study confirms that these objectives are universal for vast majority of the participants across all geographies including Asia Pacific. The actual pay effectiveness is the degree to which organisations are able to deliver on these objectives.
Strikingly, self-reporting assessment of close to 2,000 organisations suggest that close to 50% of the organisations fail to meet more than four of these objectives and only 51% experience success in delivering two of their objectives.
A significant portion of a company's annual expenses is tied to pay and benefits. The fact that close to 50% fail to achieve the desired outcomes indicates a great opportunity for programme redesign at best or worse, a possible mishandling of funds. Either way, it is a clear mandate for the HR and rewards professionals to rethink how their current programmes are designed and implemented and what are the best ways to improve the return on the significant investment into pay and benefits.
Our Pay Effectiveness and Design Survey has found that organisations that have taken action on their base pay structure and compensation philosophy are 14% more effective at accomplishing the objectives of their pay programmes. Seventy-one percent of participants said they have already changed or are planning to change their base salary structure (Figure 3).
Most respondents have already changed their base salary structure design or are planning or considering doing so through fundamental design changes
| Global | Asia Pacific | Middle East | Southern and Eastern Europe | Southern Africa |
|---|---|---|---|---|
| 71% | 78% | 68% | 58% | 71% |
Source: 2024 Pay Effectiveness and Design Survey
One of the reasons cited for changing the base salary structure is to adjust the fundamental design principles to better align with business strategy, culture and values. Another is to introduce more structures to accommodate increasingly diverse jobs and skills. Also, organisations want to improve internal pay equity and enhance external competitiveness.
Meanwhile, seven in 10 organisations reported that they have a formal non-executive compensation philosophy in place (Figure 4). However, only three in five organisations have updated their compensation philosophy in the last three years. This is important as we found that companies that maintain an updated compensation philosophy are more likely to outperform their peers on business performance, talent retention and employee productivity.
About 7 in 10 organisations have a formal non-executive compensation philosophy, and about 3 in 5 have updated it in the last three years
| Global | Asia Pacific | Middle East | Southern and Eastern Europe | Southern Africa |
|---|---|---|---|---|
| 71% | 68% | 75% | 74% | 76% |
Source: 2024 Pay Effectiveness and Design Survey
For those that have updated their compensation philosophy, the initiative has mostly been driven by the need to enhance employee experience and strengthen talent attraction and retention, rather than by leadership changes. However, organisations have reported that they are struggling to communicate their compensation philosophy to both current and prospective employees, which is an opportunity for improvement.
In addition to improving pay programmes, companies can adopt a total rewards strategy to maximise the attraction and retention of digital talent. This is especially critical nowadays as more employees prefer to stay with their employers compared to two years ago (Figure 5). As such, organisations can use this opportunity to enhance the employee experience of their workforce.
In fact, our Global Benefits Attitudes Survey has found that the impact of benefits in the decision of workers to either join or stay in a company has increased over a five-year period (Figure 6).
The increasing importance of benefits may have been a result of constant economic uncertainty; hence, employees are seeing them as a source of security and are looking to their employer for greater support. However, employers and employees are currently not aligned regarding what type of benefits are more important. This reveals an opportunity for organisations to rethink the benefits that they currently provide vis-à-vis the available talent pool, costs and stakeholder requirements to maximise the ROI from their benefits spend.
The robust AI market and the growing demand for digital talent call for organisations to examine their pay programmes and ensure that they continuously support the critical skills they need to adapt to rapidly advancing technology. In this initiative, having comprehensive market data is key to obtain an objective perspective on internal pay practices. This will allow organisations to come to data-driven decisions and ensure their overall compensation strategy aligns with their business objectives and demand for talent.
If you are interested in the recent WTW Pay Strategy and Effectiveness survey, please visit the page to secure your complimentary copy.
