Indian engineer B Ramachandran has opted for life in smaller cities over major tech hubs like Bengaluru and Chennai. After the pandemic, the 47-year-old settled in Madurai, a temple town in Tamil Nadu, citing the opportunity to be with his ageing mother while working for New York-based technology services firm Genpact as a “blessing”.
The shift to smaller cities by IT companies is gaining momentum, driven by the availability of talent like Ramachandran and the allure of cheaper land costs, rents, and wages.
Hiring Ease and Cost Efficiency
Pre-pandemic, the flow of workers largely went from smaller cities to major IT hubs. However, now, companies find it easier to recruit in tier 2 cities, alleviating the need for talent acquisition drives in places like Bengaluru and Chennai.
Selvaganesh M.P, founder of IT firm SMI, notes this shift, stating that convincing experienced talent to move to smaller cities like Madurai is no longer necessary post-COVID-19.
Expansion of Tech Giants
Major players like HCLTech, Cognizant, Tata Consultancy Services, Infosys, and Wipro are expanding into smaller cities due to cost efficiency, government incentives, and the abundance of talent.
HCLTech, for instance, has exceeded its target of staffing 5,000 employees in Madurai by 2025 due to pandemic-induced demand. It has also expanded its presence in other tier 2 locations such as Nagpur, Vijayawada, and Lucknow.
Benefits and Implications
The move to smaller cities helps companies reduce attrition and cut costs, crucial in the face of weak sales growth in the Indian IT sector amidst global economic uncertainty.
Reports indicate that employee salaries are notably lower, and real estate rentals are significantly cheaper compared to established tech hubs.
Government Incentives and Economic Impact
State governments are offering various incentives like stamp duty concessions, land benefits, and subsidized power to attract jobs to smaller cities.
This shift not only impacts the IT sector but also spurs economic growth in these cities, leading to improved lifestyles and increased consumption.
Conclusion
The trend of tech companies decentralizing to smaller Indian cities marks a significant shift in the country’s IT landscape. With benefits ranging from cost efficiency to talent availability and government support, this move could potentially reshape the dynamics of the Indian tech industry and boost the economies of tier 2 cities.
