Better job prospects in tier-II & III cities will boost economic growth

India has emerged as a talent hub for the world as its leadership in technology being beyond any doubt. The recent Deloitte and Nasscom report on how tier-II cities are increasingly becoming home to technology talent throws some interesting insights. It finds that tier-II and tier-III cities are home to 11–15 per cent of India's technology talent now. People in these emerging cities have many opportunities as remote work is getting a wider acceptance. Smaller towns appear promising because 60 per cent of engineering, arts and science graduates in India are coming from these locations. No wonder, tier-II cities have started to take up leadership roles in terms of fostering innovation. According to the report, this ecosystem has generated around nine lakh direct and three lakh indirect jobs over the past decade. Over 7,000 of the country’s startup businesses, constituting 39 per cent of the overall, are based in these emerging hubs. Even global enterprises are slowly moving to tier-II centres for setting up technology captives. These locations are now home to over 140 global capability centres, demonstrating the interest of global organisations in them.

Obviously, cost is one of the primary factors driving such growth. As compared with mature hubs, tier-II cities offer businesses the benefit of 25 per cent–30 per cent lower talent pool costs and almost 50% lower rentals. With cost advantage and ample talent pool, there is no looking back on growth prospect of these centres. Some tier-II cities like Chandigarh, Jaipur, Lucknow, Ranchi, Guwahati, Bhubaneswar, Vijayawada, Coimbatore, Mysuru, and Kochi among others, are witnessing high growth in terms of new centres, job growth and talent pool. Hopefully, more tier-II cities will make it to this league. The report’s findings reflect that India as an economy is no longer dependent on growth in mega cities. Such decentralisation augurs well for the future growth of the country. By and large, the country’s population lives in small towns and villages, which are overly dependent on agriculture. This gives rise to a situation where many educated youth remain unemployed or enter agri-related areas without any gainful employment. Such a trend is creating a situation whereupon India faces the risk of losing its demographic dividend.

If India wishes to emerge as the third largest economy in the world, it has to leverage its young population. This can only be possible if growth is decentralised and penetrate into tier-II and tier-III cities. Young people can then get gainful employment without having the need to migrate to big cities, which are subject to severe infrastructure pressure because of large-scale migration. Moreover, the quality of lives will be better if the employed live closer to their home towns or villages. From this perspective, the service sector can play a critical role. Within this sector, growth of technology sector in the emerging cities can absorb many young masses. It is, therefore, important to skill graduates in small cities with the recent technology trends for better employment prospects.