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Indian Tech Talent Thrives in Smaller Towns, Offers 50% Cost Advantage: Deloitte & Nasscom

A recent report by Deloitte India and Nasscom shows that emerging tier 2 and tier 3 towns in India house up to 15% of the nation’s tech talent. These towns could potentially reduce costs by 50% for the $245 billion tech industry. Notably, this applies to cities like Ahmedabad, Chandigarh, Indore, Jaipur, Kochi, Mysuru, Warangal, Hubli, Madurai, Raipur, Guwahati, and Visakhapatnam.

The survey indicates that talent pool costs are 25–30% lower than in mature hubs. Moreover, real estate rentals are 50% cheaper. These places host 140+ Global Capability Centres (GCCs), which highlight their competitive edge. This makes them an appealing growth option with reduced investments.

At the moment, tier-2 and tier-3 cities are home to up to 15% of India’s tech talent. The survey reveals that residents in growing cities are finding new prospects as work decentralization gains momentum.

Sumeet Salwan, Partner at Deloitte India, notes a significant shift in the post-pandemic era. Activity decentralization across the country contrasts with the previous focus on big cities.

Around 60% of India’s graduates are from smaller villages, with 30% moving to tier-1 cities for jobs. Salwan notes that these areas currently hold 10-15% of tech talent. They offer growth potential with government-backed infrastructure support, akin to an ‘if you build it, they will come’ expansion strategy.

In the past decade, the startup ecosystem reshaped the industry, leading to 900,000 direct and 300,000 indirect job creations. Moreover, over 7,000 startup businesses, accounting for 39% of the nation’s total, are situated in developing centers serving various sectors from DeepTech to Business Process Management (BPM).

Startups in this area surged by 50% from 2014 to 2018. Experts predict a 2.2X growth by 2025. According to Salwan, this “confirms the well-established idea of a symbiotic relationship between the tech sector and the innovation ecosystem.

The potential for exponential growth in these developing centers stems from government initiatives, the talent pool, and a new work distribution model.

The report’s 26 places have the potential to become the centre of innovation and development. A highly skilled workforce proficient in cutting-edge digital technologies drives this trend. Around 800,000 individuals possess this skill set in these expanding tech hubs. Among these growing centers, approximately 100,000 individuals (from the targeted talent pool) exhibit advanced proficiency in the latest digital technologies.

“As state governments and local ecosystems invest in skilling and improved ease of doing business, these burgeoning hubs are now essential waypoints in India’s journey to become a global technology powerhouse,” said Sukanya Roy, Head GCC and BPM at Nasscom.

In total, these growing hubs house 15 of the 60 STPI centers and 83 of the 242 SEZs in India.

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