India is witnessing a major shift in its job market, with recruitment growth accelerating rapidly in Tier-2 and Tier-3 cities.
Cities such as Indore, Jaipur, Ahmedabad, Kochi, and Chandigarh are leading the wave, as hiring in these regions has surged up to 20%, compared to 14% in metropolitan cities, according to leading jobs and talent platform foundit.
The platform estimates 1.28 crore potential jobs could be created in smaller cities this year.
Companies building ‘Regional Capability Corridors’
A report by UpGrad Recruit indicates that companies are increasingly establishing Regional Capability Corridors in smaller cities.
The shift is driven by the adoption of AI, improved stability, and lower operating costs. The report predicts that tech roles with AI exposure could rise from 20% in 2024 to 32% by 2027.
The report also reveals that 79% of HR leaders believe employee retention in smaller cities is equal to or better than in metros.
Tech hiring in small cities set to rise
In FY 2024, Tier-2 and Tier-3 cities accounted for 12% of tech hiring, which could rise to 19.7% by 2027.
Companies are prioritising roles such as engineering, support, data analytics, and backend operations, leading to greater local skill development and employment opportunities.
Regional hubs drive lower costs and better retention
Companies are increasingly choosing Tier-2 cities to build talent hubs due to lower costs and a broader talent pool.
While job-switching is common in metros, employees in smaller cities tend to stay longer, contributing to stability.
UpGrad Recruit reports a 40% increase in placement mandates from Tier-2 and Tier-3 cities in the past year.
Demand for AI engineers, data analysts, and automation specialists has risen by 40%, particularly in BFSI, IT services, and manufacturing sectors.
Cities such as Ahmedabad-GIFT City, Coimbatore, Kochi, Indore, and Lucknow now account for almost 25% of AI-related hiring mandates.
Government policies and lower costs fuel growth
State governments are introducing policies to attract investment in smaller cities. The cost of talent and infrastructure in Tier-2 cities is 10%–35% lower compared to Tier-1 cities.
Following favorable policies in states like Tamil Nadu and Karnataka, major companies are expanding Global Capability Centers (GCCs) in smaller cities beyond Bengaluru and Chennai.
Industry estimates suggest that foreign GCCs could invest up to ₹9.6 lakh crore in India by 2030, and AI and data science roles may offer salaries up to 20% higher than average.
GCC expansion and job creation
India currently hosts over 1,500 GCCs, creating around 1.3 million jobs, with over 500 new GCCs expected by 2026.
Cities such as Visakhapatnam, Coimbatore, Jaipur, Vadodara, Kochi, and Chandigarh have already seen GCC openings, offering services in Finance, HR, Supply Chain, Engineering, R&D, and Digital Cloud.
Women professionals benefit significantly
The shift is particularly impactful for women, with 65% of female tech professionals preferring to work in smaller cities closer to home, compared to 41% of men.
Startups and emerging tech hubs
Increased funding in FinTech, HealthTech, and AI-first ventures is expected to boost hiring in Product, Engineering, Growth, and Revenue roles. Around 50% of registered startups are now based in Tier-2 and Tier-3 cities.
According to NASSCOM and Deloitte’s Emerging Tech Hubs report, 26 cities, including Jaipur, Indore, Coimbatore, and Ahmedabad, have emerged as technology hubs, and 60% of graduates come from smaller cities.