Tech companies plug into India’s smaller cities for talent
Discover the post-pandemic opportunities and cost savings as Tech companies plug into India’s smaller cities for talent.
Explore the post-pandemic opportunities and cost savings driving this strategic relocation, and learn how businesses are leveraging skilled professionals outside major urban hubs for enhanced efficiency and competitiveness in the tech industry.
Tech companies are increasingly tapping into the rich talent pool nestled within India’s smaller cities. With the shifting dynamics brought about by the pandemic, businesses are recognizing the immense potential and cost-effectiveness of leveraging skilled professionals outside major urban hubs. This strategic relocation, exemplified by movements to cities like Madurai, not only harnesses untapped talent but also fosters economic growth and innovation in regions traditionally overlooked by tech giants. Embracing this trend promises mutual benefits, empowering local communities while propelling companies towards heightened efficiency and competitiveness in the ever-evolving tech landscape.
B. Ramachandran, an Indian engineer, now favors smaller cities over Bengaluru and Chennai, two of the country’s biggest tech hubs.
After the outbreak, the 47-year-old moved to the temple city of Madurai in Tamil Nadu. He says that working for information services company Genpact in New York and being able to live with his elderly mother is a “blessing” and that he has no plans to leave his hometown.
Tech companies are now expanding into smaller towns, in part to attract workers like Mr. Ramachandran, and to take advantage of cheaper land prices, rents and wages.
Before the pandemic, most of the workers had migrated from smaller areas in search of employment to the country’s major IT hubs. However, some companies are already reporting that it is easier to get people in Tier-2 locations.
“HR and I used to go to Bengaluru and Chennai to interview experienced talent and convince them to move to Madurai,” said Selvagnesh MP, founder of SMI, which was acquired by mid-cap IT company Happiest Minds in 2023. “That’s no longer needed because the equation has changed post-COVID-19.”
US-based Cognizant and India’s Tata Consultancy Services, Infosys, HCLTech and Wipro are moving to smaller cities due to cost efficiency, government incentives and availability of talent.
HCLTech employs 6,700 people between its two Madurai offices. Its initial target of having 5,000 employees by 2025 was surpassed because of the demand the pandemic caused. Since the epidemic, it has also increased the number of people working in tier-2 cities like Vijayawada, Andhra Pradesh, Nagpur, Maharashtra, and Lucknow, Uttar Pradesh.
Industry watchers say the trend towards smaller cities helps companies reduce attrition and cut costs at a time when India’s $254 billion IT sector is facing weak sales amid global economic uncertainty. I am suffering from an increase.
According to a report by Deloitte and industry body Nasscom, employee salaries are 25%-30% lower and real estate rents are about 50% cheaper than in established tech hubs.
Tech companies use the talent Outside of Urban Areas
Cognizant is looking to move out of a large facility in Chennai as part of its plan to reduce real estate costs by $100 million by 2025, even as it opened an office in Bhubaneswar in Odisha.
Tech Mahindra is attempting to attract talent in Tier-2 cities with a project named “Nxt.Towns,” and Wipro is enticing staff members to go to its headquarters in smaller towns by means of “Project Lavender.”
According to emails seen by Reuters, Wipro is paying double the usual referral bonus to employees for referring people to vacancies in Kochi in Kerala and Visakhapatnam in Andhra Pradesh. He declined to comment specifically on the development.
However, Wipro said it continues to invest in Tier-2 and Tier-3 cities and has set up offices in several emerging cities such as Ahmedabad, Bhubaneswar and Guwahati to leverage talent and scale. .
Cognizant did not comment, citing a period of silence before its quarterly results. Emails requesting comments were not answered by Infosys or Tata Consultancy.
The trend of decentralization by firms has hurt the demand for office space. The tech sector’s share of India’s top seven markets fell to 20.9 percent in 2023, the lowest in more than a decade, data from JLL showed.
The managing director of Cushman & Wakefield for India and Southeast Asia, Anshul Jain, stated, “The IT services sector has really struggled to get people back into offices.”
The change comes even as state governments offer stamp duty concessions, land benefits, subsidized electricity and other incentives to bring jobs to small towns.
And as jobs move to these cities, so will consumption.
Mr. Jain stated that “we’re seeing an improvement in lifestyle in secondary cities, whether it’s retail, entertainment, or F&B services,” and that “the economy is stimulated” by hiring tech.