How Tier 2 Cities are Reshaping India’s Employment Landscape

The current jobs landscape reveals a tale of two contrasting worlds. In the metros, enterprises are treading carefully amid the macroeconomic and geopolitical challenges, causing job creation to slow down. Meanwhile, in the smaller towns and cities, a different narrative unfolds—a thriving demand for professionals fueled by companies keen on meeting the rising consumer wave.

Xpheno’s research reveals that October 2023 witnessed a near 2X surge in entry-level professional job opportunities in small towns compared to the same period last year.

While fintech enterprises, NBFCs, MSMEs, e-commerce, and retail giants are gearing up to expand, their spotlight is on tier 2 and 3 cities, where the real action seems to be unfolding. On the other hand, the technology and startup sectors, typically the major contributors to job creation, are playing a subdued tune.

This shift is not a mere blip on the employment radar; it’s a calculated move. The pandemic shattered geographical boundaries, prompting a question for businesses—why confine operations to a costly metro when efficiency can thrive in a tier 2 or tier 3 city? It’s a question our industry has grappled with, and the answer is reshaping the employment landscape. 

The allure of tier 2 cities is a strategic response to a changing employment landscape. In this post, we dissect why tier 2 and tier 3 cities are emerging as Talent Brands* for white-collar jobs.

Return-to-Roots:

Picture this: seasoned professionals, weary of the metro chaos, are turning homeward. Call it Return-to-Roots, accentuated by the post-COVID mindset. Family commitments, the desire to move away from the city bustle, or caring for aging parents—these factors are pulling professional talent away from the metros. The result? Reverse migration, populating the small cities with top-notch talent. Improved infrastructure and connectivity in tier 2 cities have further fueled this trend.

Educational Infrastructure:

A robust educational infrastructure is the bedrock of a thriving talent pool. Universities and colleges in tier 2 cities have been producing a steady stream of qualified professionals. Tier-2 cities like Kanpur, Patna, and Dehradun are rising as potential education hubs. Meanwhile, Jaipur and Nagpur have already earned spots on the list of the country’s leading education hub cities. India’s rapid internet adoption is also fueling the tier 2 talent factory. Online courses are helping professionals upskill and provide them exposure outside their domain. 

The Emerging Startup Ecosystem:

The startup scene, once exclusive to megacities, is also undergoing a transformation. Government initiatives and incentives like tax benefits, financial backing, and streamlined regulations are powering the startup ecosystem in small towns and cities. The focus is on revamping infrastructure and facilities to help build identities of tier-2 and tier-3 towns as business-friendly locations. 

Tier 2 cities are now nurturing incubators and co-working spaces, creating fertile ground for startups to sprout and flourish. It’s not just small players; mid-sized companies are placing their bets on these cities, expanding the scope of opportunities.

Cost-effective Talent:

Cost-effective talent pools are a significant draw. Hiring in smaller cities is not just a budget-friendly affair for companies; it’s an attractive proposition for employees. House Rents and daily expenses in tier 2 cities take a dip. The lower cost of living allows for settling with slightly lesser salaries without compromising on the quality of life. This cost dynamics can be a game-changer in shaping tier-2 cities’ talent brand and identity.

Shorter commutes and cleaner environments are some other major pulling factors. Less time in traffic also influences an increase in productivity—a win-win equation for employers and employees alike.

Conclusion

The future of India’s professional workforce is not just confined to the metros; it’s flourishing in the diverse and thriving landscape of tier 2 cities. The surge in professional talent in tier 2 and tier 3 cities is a well-timed shift for businesses and talent alike. The momentum is palpable, and it’s high time for those contemplating a venture or a career move to turn their focus towards the smaller towns in India. 

*The Talent Brand is largely a perception driven by geographic, social, political, cultural and economic factors of the location. It’s the desirability of a place for talent to live in and build a progressive career.