Every time we visit smaller towns, rural areas, or agriculture expos, we’re struck by how much talent and innovation is out there.”- Pushkar Limaye, Co-Founder and CTO of Carnot Technology.

Studies show that approximately 50% of the recognized start-ups in India are based out of Tier 2 and Tier 3 cities. According to the report, many multinational companies are establishing and expanding their presence in non-tier 1 cities, showing that these areas are becoming increasingly attractive for entrepreneurs and businesses alike. In this article, we will explore the reasons behind this trend and what this means for job seekers.

Reason Behind the Shift from Metro Cities

For many years, Tier 1 cities such as Mumbai, Delhi, and Bengaluru were seen as the epicenter of India’s corporate world. However, in recent years, non-tier 1 cities like Nagpur, Lucknow, Jaipur, Coimbatore, etc. are becoming increasingly attractive for business investments due to three major factors.

High cost of living: Most metro cities are experiencing extreme saturation in terms of space and population, while witnessing unprecedented pollution. Due to this, the cost of living has increased manifold. In contrast, non-tier 1 cities offer a more affordable living, allowing employees to maintain a better quality of life and an overall better work-life balance. A recent EY study indicates that the cost of living in Tier 2 cities is 10-35% lower than the living costs in Tier 1 cities.

Apart from employees, businesses also enjoy the advantage of lower operational costs and reduced competition, making such regions more conducive for long-term success.

Talent availability: The growing availability of untapped talent in Tier 2 and 3 cities, and the meteoric rise of such cities as centers for specialized talent. For instance, cities like Mangalore, Lucknow, and Pune are assuming growing importance to find employable talent for IT and BFSI talent.

Government efforts: The government’s active intervention through subsidies and interlinked programs has also played a key role in this transformation of rural areas as hubs of employment. For example, the Smart Cities Mission aims to promote sustainable and inclusive urban development in 100 cities across India. This has led to the creation of new infrastructure, such as roads, public transportation, and water supply systems, which has improved the quality of life and made these cities more attractive to employees and businesses alike.

Similarly, the Atmanirbhar Bharat Abhiyan launched in 2020 aims to promote self-reliance and domestic production in India, more so in rural regions, which encourages MSMEs to set up bases in such areas and generate local employment, thereby reducing outflow of talent to metros.

Popular Sectors for Employment in Non-tier 1 Cities

The Decoding Jobs 2023 India report highlights the growing trend of companies in different sectors hiring from non-tier 1 cities. The report shows that in the IT sector, the number of employed people in non-tier 1 cities is set to increase from 33% in 2022 to 47% in 2023. Similarly, the Internet Businesses sector is expected to see a 38% increase in new hires from non-tier 1 cities.

In the Manufacturing sector, about 60% of the workforce is expected to come from non-tier 1 cities in 2023. The report also states that nearly 66% of Global In-house Centers (GICs) are highly likely to hire from non-tier 1 cities in 2023.

Agnipath Trainees and Opportunities in the Corporate World

In a transformative step to fuel the growth of the armed forces, the Indian government introduced the Agnipath scheme in June 2022, which seeks to enlist young individuals into the Army, Navy, and Air Force for a four-year term.

The scheme has the potential to instill in young individuals certain values that cannot be effectively taught in a traditional curriculum. The rigorous training and experience gained through the program develops several high-value skills in terms of discipline, leadership, and team management, among several others, that can make Agnipath trainees high-potential candidates for India Inc once their four-year training is complete.

Furthermore, due to exposure of a large segment of such trainees to rural parts of India, they will be well-equipped with an understanding of how things work in these areas and can provide rich insights into local markets, helping businesses serve their target audience better.

According to Mr. Anand Mahindra, the chairman of Mahindra Group, “Large potential for employment of Agniveers in the Corporate Sector. With leadership, teamwork & physical training, Agniveers provide market-ready professional solutions to industry, covering the full spectrum from operations to administration & supply chain management.”

The Way Forward

In the words of Mahatma Gandhi, “The future of India lies in its villages.” This quote rings true even today, as non-tier 1 cities and rural areas present a wealth of untapped potential for Indian corporations. With extreme focus on profit-driven growth, such regions offer a promising path for Indian corporations to achieve sustainable business growth and for employees to have a successful professional life while enjoying a healthy personal life in the long run.

About the Author

Pankaj Bansal is the Co-founder of Taggd and Work Universe (a Fund investing in jobs and work tech). He is a non-executive director at Karmayogi Bharat (Capacity building or Civil Servants) and many other startups. Follow him on Twitter at @pankajbansalPB.