Excerpt from Business-Standard Article, Published on Apr 25, 2024
In a strategic move to cut costs and tap into new talent pools, Indian tech giants are shifting their focus towards smaller cities, away from the traditional tech hubs like Bengaluru and Chennai. The pandemic has accelerated this change, which has forced businesses to review their operational strategies.
One such example is B. Ramachandran, a 47-year-old engineer who now resides in Madurai, Tamil Nadu, opting for a quieter life close to family while working for Genpact. His story reflects a broader trend where employees are choosing to settle in smaller cities, leading companies to follow suit.
HCLTech, for instance, has witnessed success with its two offices in Madurai, surpassing its initial staffing targets due to increased demand post-pandemic. Similarly, other tech giants like Cognizant and Tata Consultancy Services are also expanding their presence in Tier 2 cities, capitalizing on lower operating costs and government incentives. This move not only helps companies reduce attrition but also cuts down on expenses, with employee salaries being notably lower and real estate rentals significantly cheaper compared to major tech hubs. Deloitte and Nasscom report a 25%–30% reduction in salaries and a 50% decrease in real estate costs.
Companies are actively promoting this decentralization through initiatives like Tech Mahindra’s “Nxt.Towns” and Wipro’s “Project Lavender,” encouraging employees to relocate to smaller cities. Wipro is even offering double the usual referral bonus for directing people to vacancies in cities like Kochi and Visakhapatnam.
The shift towards smaller cities is not only reshaping the tech landscape but also impacting the real estate sector. JLL data shows a decline in the tech sector’s share of office space in major markets, signaling a significant change in where business operations are centered. State governments are also incentivizing this move with stamp duty concessions and other benefits, further fueling the shift. As jobs migrate to smaller cities, there’s a ripple effect on local economies, driving growth in retail, entertainment, and other sectors.
Overall, the embrace of smaller cities by Indian tech companies represents a paradigm shift in how businesses operate and could potentially lead to significant economic growth beyond metropolitan areas.
To delve deeper into this topic, please read the full article on Business-Standard.
