Finance executives in India Inc have reason to cheer. According to CFO Asia magazines 2008 Compensation Survey, finance executives in India got the highest pay hikes in all of Asia in 2007.

While chief financial officers (CFO) got pay hikes of 25% in their salaries last year, other finance professionals such as financial controllers, treasurers and other secondtier finance executives saw their salaries go up by 28%. In contrast, CFOs got a 14% hike in China, 11% in Hong Kong, 14% in Indonesia, 19% in Malaysia, 10% in Singapore and the average for Asia was 16%. As far as other financial professionals go, the numbers are as follows: 13% for China, 12% in Malaysia, 11% in Indonesia , 9% in Singapore and 5% in Hong Kong, resulting into an Asia average of 15%.

The average salary of CFOs in India stood at $92,206, making it the third-highest in Asia after Hong Kongs $169,460 and Singapores $106,518. The survey points out that two out of ten CFOs in Hong Kong, India, and Malaysia switched jobs last year, while 15% of CFOs did so in China. Job switching was also pronounced among the second-tier finance executives in China, Hong Kong, India , and Malaysia.

But what really accounts for this huge increase in compensation for finance executives in India? What are the forces at work here? One reason is the gap between demand for finance professionals and supply. Says the magazine, The spurt of economic growth across the region has been so strong that demand is still outstripping supply. Adds Anita Belani, country head (human capital group), Watson Wyatt, The market is growing and the talent pool is limited. At the top roles get more strategic and the people who can fill those slots become harder to find.

The rise in CFO compensation has a lot to do with a change in the CFOs image from a pure finance guy to a business and strategy leader. Says Vishal Chibber, head of HR at Kelly Services India, a staffing company and HR solutions provider, CFOs in some companies are seen as No 2 after the CEO, a role traditionally played by the sales head or the operations head. Other than pure finance, CFOs today have added responsibilities such as HR and IT.

In most cases the CFO compensation is equivalent to that of the sales head. Adds Belani, With the CFOs role encompassing both finance and strategy, it is becoming hard to find people with those kinds of skills. Hence, companies have to keep compensation competitive.

Some of this has to do with the stock markets as well. Says Chhiber, Because of the IPO boom in the Indian market in the last few years, a lot of companies have been taking the equity route. So they need a strong finance head who knows where to get the funds from the market to take the company into the next level of growth.

Also, the emergence of sectors like KPO are having a cascade effect of sorts. Says Chhiber, With the KPO and BPO boom, theres been a jump in salaries at the entry level for chartered accountants. This has a cascade effect all the way up to the top and is also impacting salaries in other industries.