Why India’s tier 2 cities will become the future tech hubs

With major cities already saturated, the levels of competition are high alongside congestion, limited resources, and rising operations costs.

Why India’s tier 2 cities will become the future tech hubs
The digitization of workplaces and adoption of remote working enables organizations to look beyond tier 1 cities for growth and expansion. (Pixabay)

By Boopathy Rajendran

The Indian technology sector showcased immense resilience and rapid growth as the economy embraced its long journey toward recovery after the impact of the pandemic. The rapid digitization across industries and adapting to the new normal transformed the way enterprises operate. Before the pandemic, organisations focused their expansion in metropolitan cities owing to the ease of access to resources, workforce availability, and global connectivity.

The digitization of workplaces and adoption of remote working enables organizations to look beyond tier 1 cities for growth and expansion. With major cities already saturated, the levels of competition are high alongside congestion, limited resources, and rising operations costs. A well-thought-out expansion plan into tier 2 and 3 cities offers numerous benefits for organizations, the workforce, and stakeholders.

Sustainable Roadmap for Expansion

Expansion into tier 2 and 3 cities offers scope for long-term expansion plans that are flexible and sustainable to meet future demands and challenges. With major destinations experiencing the weight of saturation, workforce shortages, infrastructural limitations, and challenges, the new destinations often offer a clean slate for organizations to start their next phase of expansion journeys. Also, organisations can explore new stakeholders, including local businesses, governments, and educational institutions, for shaping an ecosystem and infrastructure crucial for future growth and resilience.

Mobilising Potential Workforce

As organisations expand into tier 2 and 3 cities, most of the workforce can work closer to their homes or in an environment they are adjusted to. Mobilising the potential workforce from rural areas helps close the workforce shortage while addressing a series of social challenges. Further, the human potential could be upskilled and trained to meet market requirements, enhancing the quality of the local workforce.

The tech sector’s growth has concentrated in urban areas. Expansion into tier 2 and 3 cities redistributes the benefits of the sector’s growth among semi-urban and rural areas. With the demand for the workforce in the urban sector, creating equitable opportunities will bring down the cost of labour. Further, working in tiers 2 and 3 cities allows people to save a significant portion of their income. Proximity will enable people to stay in touch with their dear and near.

Happier and Serene Workplace

Compared to metropolitan cities, tier 2 and 3 cities allow people to enjoy congestion-free life and escape the hassles of urban life to focus on a serene and slow-paced lifestyle. Flexibility will enhance work-life balance and productivity at work. Allowing people to work from their comfort zone improves attrition rates and job satisfaction.

With many organizations exploring ways to tackle the rising stress levels, a serene working environment can offer a long-lasting solution for holistic work culture. The rural sector benefits from interactions between the local workforce and those in the tech sector, stimulating innovation. The service providers and vendors can expand their operations to support organizations operating in the region, creating additional revenue and employment opportunities with localized solutions. Aligning to this development, local governments will be encouraged to develop infrastructure to support growth, nourishing the local economy.

Maximising human potential

While closing the knowledge gap and enabling learning programs for the workforce is crucial, organisations can partner with local governments and educational institutions by working closely to train students and youth on the latest technological developments to make them job-ready.

Apart from encouraging the local population to explore domains of knowledge and adapt to the market, the indirect opportunities open new streams of income generation opportunities. As more organisations are looking to expand to tier 2 and 3 cities, this ushers equitable growth of the economy across the nation leveling regional disparities to a great extent. Besides, it offers scope for reverse migration for those from cities to work in rural areas to explore the lifestyle and culture in the region. Creating job opportunities also reduces the need to migrate to cities to seek better opportunities and support optimum population distribution per region, which is crucial for national progress.

While these initiatives provide a favorable environment for enterprises, they also lay the foundation for national development and the region’s contribution toward economic growth and social welfare. Working professionals cite more reasons to look forward to expanding into tier 2 cities, including increased job satisfaction, enhanced quality of life, and improved work-life balance, along with a significant savings potential. Beyond making a difference in the tech sector, expansion to smaller cities and towns brings a long-lasting difference socially.

(The author is Senior Vice President of Delivery and Services, Vuram. Views expressed are personal.)

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