Big companies often shift their focus to smaller towns in search of outsourcing opportunities and more affordable labour. Not anymore. Now, what they are also looking for is better talent in smaller towns as they look to expand their operations.
According to Randstad’s India Talent Insights Report 2024, cities like Jaipur, Vadodara, Indore, Ludhiana, Chandigarh, Lucknow, Bhopal, Surat, Mohali, Kochi, and Coimbatore have emerged as key job hotspots over the past six months.
The report indicates a 25-35% rise in hiring in Tier 2 and 3 cities from 2023 to 2024, particularly in sectors such as retail, consumer goods, banking and financial services, energy and utilities, pharma and healthcare, and manufacturing, with AI also taking a big part of the chunk. These companies include Bajaj Finserv, IBM, Accenture, Infosys, Genpact, Vodafone, Airtel, and many banks.
Similarly, several data centre companies are also expanding their bases to Tier 2 and 3 cities in search of talent.
Saandeep Dandekarr, senior director at NTT Global Data Centers and Cloud Infrastructure, told AIM that the move would also add a bunch of jobs, which he categorised as the construction phase that would see a temporary spike in employment. Then there’s the operational phase promising more sustainable job opportunities, albeit with a smaller workforce due to advancements in automation and AI.
A few weeks back, IBM India HR head Thirukkumaran Nagarjan said that they are actively hiring local talent. “Instead of hiring talent from smaller cities and placing them in offices in metros, we are taking our offices closer to talent pools across India,” he said.
Speaking with AIM, Celebal Technologies’ CEO Anirudh Kala explained why it was a big deal that Microsoft partnered with them as a company sitting in Jaipur. “There is no dearth of talent in this country…there are people who didn’t get a chance,” said Kala.
He added that the company acquired a lot of talent from Tier 2 and even Tier 5 towns in India and gave them the nurturing and platform needed to grow.
Is the Talent Really Present?
This comes at a time when the IT sector has seen a decline in hiring across all regions, with hundreds of thousands of jobs vacant.
Many tech enthusiasts who planned on moving to Bangalore, Mumbai, and other cities for IT jobs are choosing to remain in their towns as the opportunities back home increase. And a few have been relocating from bigger cities to their hometowns for the same reason.
Furthermore, as upskilling has been on every tech company’s monthly quota, most are focusing on training their existing employees instead of hiring new ones, which also helps cut costs.
Viswanath PS, the CEO of Randstad India, listed out the many reasons that put smaller cities at an advantage. These include: an expanding pool of employable talent, substantial infrastructure investments, good educational institutions, lower labour and operational costs, favourable government policies.
Besides, rising disposable incomes are boosting e-commerce, and several companies are planning to set up manufacturing units in remote areas.
Despite this, the need for specialised skills is crucial to land a job in this field. Data annotation, one of the jobs that was majorly outsourced to smaller cities, is also in demand, creating more white collar jobs. Setting up shop in small cities also costs less as the cost of living for employees there is way lesser.
Meanwhile, there are numerous AI-ML courses coming up in the market which are easily accessible for job seekers in these cities, enabling them to upskill faster. “These programmes can lead to a salary increase of 20-30 per cent in metro cities and 15-20 percent in Tier 2 and 3 cities,” said Sachin Alug, the CEO of NLB Services.
For tech companies, these are untapped fresh skills that they are actively looking for.
According to the India Skills Report 2024, the manufacturing sector is projected to generate 5 million AI-related jobs by 2030, while the retail industry might see a loss of 850,000 jobs by 2025 but is expected to gain 4 million new AI roles. This emphasises the importance of continuous learning and upskilling.
Campus Placements are One of the Reasons
Vinayak Gupta, the head of placement and outreach at JECRC University in Jaipur, said that one of the reasons for this rise is the increase in placements in Tier 2 universities.
“As companies expand their recruitment efforts beyond major metropolitan areas, they unlock a wealth of untapped talent, driving both economic development and corporate growth,” said Gupta, while adding that these placements directly contribute to lowering unemployment rates in the cities.
Moreover, there is a surplus of graduates coming out of these smaller towns that need employment. But since IT companies are not actively hiring people citing skills as one of the reasons, there is definitely the need for graduates to upskill themselves and apply for jobs in their own cities.
Since 2022, Indian IT firms have been expanding to smaller cities in a bid to attract more talent. Infosys said that the company would open new offices in four tier 2 cities in 2022. Similar announcements were made by Accenture and IBM.
Interestingly, this is also at the time when Bangalore, the Silicon Valley of India, is toying with the idea of making its employees work 14 hours a day at the same pay.
