India’s big cities are no longer the only talent hotspots as more than 2 million employees across IT, Engineering and R&D (ER&D), and business process management (BPM) are now in the top 15 Tier-II cities, according to a study by Zinnov, a leading global management and strategy consulting firm. The report also reveals that over 140 multinational corporations have set up their global centres of excellence (GCoE) in India between 2019 and 2021.

While, traditionally, metropolitan cities Bangalore, Delhi-NCR, Hyderabad, Chennai, and Pune were locations of choice for companies to set up their global centre of excellence, the pandemic resulted in a reverse exodus of talent as companies embraced remote work mandates and hybrid work models.

Zinnov’s analysis, based on 300 emerging Indian cities, shows that Ahmedabad, Coimbatore, Chandigarh, Jaipur, and Visakhapatnam are the top 5 Tier-II cities.

A plethora of conducive factors, including high cost arbitrage, booming infrastructure and smart city initiatives have further made Tier-II cities attractive. Not surprising that Standard Chartered, HSBC, Citibank, and Mastercard have announced plans to set up hubs in these small cities as part of their expansion plans.

According to Zinnov, Ahmedabad, Coimbatore, and Chandigarh hold the pole position across parameters, with significant installed talent and the number of GCoEs currently operational. Surprisingly, Ahmedabad houses the highest niche and migratable talent pool of around 10,000 people owing to accelerated digitalisation and remote working opportunities. In the case of Coimbatore, a high number of engineering colleges has translated into a consistent supply of fresh STEM talent with new IT and ER&D hubs being set up in the southern city.

However, according to a study by Nasscom, though Tier-II and III cities have emerged as major talent hubs for recruitments, they are still facing disparity. As a result, their participation in national hiring is not as much as it should be.

But J.C. Vishwanath, principal, Zinnov, believes that talent wars have reached a pivotal point post-Covid. “As global leaders struggle to identify the right talent hotspots, Tier-II cities in India have emerged as veritable hubs of under-tapped talent. Organisations need to make deliberate and definitive efforts to realign their talent strategies to expand their footprint, while also enjoying cost advantages offered by these cities,” he adds. According to the report, Tier-II talent costs are 15-50% lower compared to those from big cities, while infrastructure costs are 50% lower.

According to Nasscom, India’s demand for digital talent jobs is approximately 8x larger than the size of its fresh talent pool, and is expected to become 20x by 2024. The challenge is that though pool supply appears to be very high, the relevant talent supply, as of FY20, was around 45–50K, which is expected to grow to 57–63K by 2024.

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