“The world is looking at India as a manufacturing powerhouse” — Narendra Modi

The emergence of tier-2 cities as major talent hubs, coupled with increased infrastructure and upskilling opportunities in these cities, has been instrumental in diversifying India’s job market away from tier-1 locations. 

Taggd’s Decoding Jobs Report projected that 40% of India’s engineering and manufacturing industry’s workforce would be hired from tier-1 cities, with the remaining 60% coming from non-tier-1 cities.

Traditionally, Delhi, Mumbai, Pune, Bangalore, Chennai, Hyderabad, and Ahmedabad were the most prominent locations for manufacturing and engineering setups, among which Delhi was at the top in 2022, with a 72% willingness among companies to hire from the city. However, new cities such as Coimbatore, Vadodara, and Nashik are now becoming increasingly popular in this sector.

Let’s look at the key factors that aid in expanding manufacturing and engineering roles beyond tier-1 cities.

India’s cost-efficient and skilled workforce in non-tier-1 cities makes it an ideal destination for companies looking to extend their operations.

• Cost-efficient:

Inflation and rising interest rates are a few factors that have contributed to increased costs for businesses worldwide. The relatively lower costs in non-tier 1 cities is a major reason why companies are bound to increasingly consider those regions as future office spaces.Compared to metropolitan cities, India’s tier-2 and tier-3 cities provide an economic advantage with lower living and labor costs for companies looking to reduce operational expenses.

• Less saturated:

A less saturated market in tier-2 and tier-3 cities means companies will face less competition in recruiting talented individuals. This is one of the crucial factors why companies are looking to expand in tier-2 and 3 cities, allowing them to easily draw in and retain skilled professionals.

• Huge talent pool:

Non-tier 1 cities have a growing pool of talented individuals as people get better access to education without migrating to cities. This provides an ongoing supply of skilled professionals. Businesses looking to expand into tier-2 and tier-3 cities understand that they will benefit from the wealth of talent available there.

• Infrastructure:

The Indian government has been making significant investments in infrastructure development for cities of tier-2 and tier-3, including enhancing connectivity and creating industrial zones. 

Tier-2 cities have also seen a significant rise in domestic passengers due to the UDAN scheme implemented by the Government of India, encouraging better air connectivity to tier-2 and tier-3 cities. Additionally, coworking spaces are also becoming increasingly popular in these regions, which makes it convenient for companies to expand and hire from these cities.

• Better living standards:

Ahmedabad, Coimbatore, Indore, Surat, and Vadodara are among the top tier-2 cities in the Ease of Living Report, 2020. The better air quality index and lower pollution levels have made these tier-2 cities more desirable for businesses and individuals.

• Closer to market:

Non-metro cities in India have seen a surge in consumption in recent years due to rising income and easier access to products and services.  Companies are now looking to tap into this growing market opportunity and hire candidates from these cities to connect with a larger customer base.

The number of manufacturing hubs in tier-2 cities is increasing, and the rising number of engineering and management schools provides an excellent opportunity for employers and job seekers.

Manufacturing companies are hiring across every level in tier-2 cities, with 78.81% for junior levels and 17.8% at the middle level. If we look at the cities leading in hiring candidates for manufacturing and engineering roles, Coimbatore is at the top for junior-level roles and middle-level roles. The electric vehicle sector is expected to expand rapidly in this city, leading to more job openings. Thane, on the other hand, leads in hiring for senior-level roles at 34.89%.

Other notable cities hiring for manufacturing and engineering roles are Jaipur, Vadodara, Chandigarh, Indore, and Nashik. As a long-term solution, many manufacturing companies are looking into creating hybrid work models to meet the demands of both office and factory professionals for more flexible working arrangements.

Since August 2022, the manufacturing sector has created approximately 50,000 direct jobs since August 2022 and the scale is only set to get higher.

“There are other economies as well that offer opportunities, but India has the potential to emerge as a responsible industrial country and position itself as a competitive alternative.” — Vyankatesh Kulkarni, Executive Director, Mercedes-Benz India

India’s manufacturing and engineering sector holds tremendous potential for job seekers across all levels with skills such as machine learning, AI, and data science. Non-tier-1 cities are becoming increasingly attractive to businesses due to their cost-effectiveness, developing infrastructure, and vast talent pool. With the right qualifications and experience, you can expect to find your desired role within this ever-growing field.

Pankaj Bansal is the Co-founder of Taggd and Caret Capital (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.