Transformation of India’s job market through Tier 2 & 3 cities

India’s job market is embracing Tier 2 and Tier 3 cities, which are now becoming significant talent hubs, fueled by concrete facts and promising trends. Industries are breaking free from urban constraints, as seen in sectors like BFSI where Tier 2 cities show 82.02% junior hiring.

A prime illustration is manufacturing, boasting 78.81% junior-level recruitment in these areas. The IT sector is also integrating Tier 2 cities notably, with 88.63% of hires being juniors.

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India’s job landscape is shifting from Tier-1 cities to Tier-2 and Tier-3 cities, which are now becoming significant talent hubs. The rise of remote work, better skill development prospects in Tier-II cities, and the expansion of various industries to these areas are driving recruiters’ interest. Sectors like telecom, consumer electronics, retail, and banking are broadening job prospects for tech professionals outside major cities. This expansion is fueled by the rapid 5G rollout and enterprises prioritizing digitalization of operations.

54% of employers expect to hire candidates from Tier-2 and Tier-3 cities, which highlights the rising availability of diverse talent in these cities, according to a Randstad India report.

Tech giants like Apple are enlarging their Indian workforce, seeking talent in locations like Hubballi and Dharwad. Apple is just one example; numerous other major multinational companies are also recruiting in tier-2 and tier-3 cities across India. The emphasis on emerging sectors like electric vehicles and electronics manufacturing is generating job openings in these regions.

Sanjay Shetty, Director, Professional Search and Selection, Randstad India, said “Over the last couple of years, tier-2 and tier-3 cities have gradually come up the ranks to feature in India’s employment mix.” 

This trend is primarily attributed to the increasing accessibility of skilled workforce in remote areas of the nation and the consistent, substantial investments in infrastructure development within these regions.

Sanjay added, “We are seeing an uptick in global tech firms setting up bases in these cities and actively hiring fresh talent. These firms are primarily from sectors like enterprise software, e-commerce, ERP domain, fintech, and travel & hospitality.”

According to the report of Randstad, Jaipur, Vadodara, Thane, Coimbatore and Chandigarh are among the Tier-2 cities that have emerged as the top five talent hotspots across the four industries and experience levels.. 

Banking, Financial Services, and Insurance Sector

Within the Banking, Financial Services, and Insurance (BFSI) sector, the report discloses a significantly greater proportion of recruitment from tier 2 cities for junior positions. In total, 82.02% of hiring occurred at the junior level, 9.90% at the middle level, and 8.08% at the senior level. Numerous companies are directing investments toward Tier 2 and Tier 3 regions because of the abundant talent pool and its cost-effectiveness.

A significant portion of this trend originates from the recruitment of freshers. Analysts predict that over 25% of entry-level positions in this category will be filled by hiring fresh graduates. The prevalence of esteemed management institutes in many Tier-2 areas, the migration of BFSI operations to Tier-2 cities, and the eagerness of recent graduates to relocate to these locations for career prospects contribute to these statistics.

According to Sachin Alug, CEO, NLB Services, “It has been reported that tier 2 cities command about 50% of talent that is employable as compared to only 30% in their tier 1 counterparts. In order to diversify talent and make the most of remote/hybrid work models, several companies are tapping into the talent pool that India’s tier 2-3 cities have to offer.”

Coimbatore, Nagpur, Chandigarh, and Kochi are Tier-2 cities that have upheld their potential and are poised to become prominent talent hubs for the BFSI sector in the future.

Manufacturing Sector

Within this sector, the report unveils a stronger inclination to recruit for junior positions in the manufacturing sector in Tier-2 cities. In total, 78.81% of hiring occurred at the junior level, 17.8% at the middle level, and 3.39% at the senior level.

The increasing establishment of manufacturing hubs in Tier-2 cities, coupled with the substantial presence of engineering and management institutes in these areas, results in a mutually beneficial scenario. This situation caters to demand while also reducing the need for migration to Tier-1 cities in pursuit of employment.

Lucknow, Nashik, Chandigarh, and Indore are Tier-2 cities that we should keep an eye on as potential talent hubs for the manufacturing industry in the future.

IT Sector 

An encouraging trend highlighted in the Randstad report is the effective integration of Tier-2 locations into the talent strategy of IT companies. Junior-level hiring constituted 88.63% of the total recruitment in Tier-2 cities, attributed to the triumph of remote work models and the presence of strong educational infrastructure in these areas. 

Beyond fulfilling the career aspirations of the upcoming generation by offering significant employment opportunities without the need for migration, this trend also has the potential to boost the economies of Tier-2 cities.

Tier-2 cities distinctly exhibit a preference for specialized technology skills across all levels, encompassing areas such as automation testing, agile methodologies, SAP, business intelligence, and more.

According to the report Tier-2 cities that we will be seeing more of in the coming years are Kochi, Chandigarh, Indore, Mohali and Vadodara

Pharma, Healthcare & Life Sciences (PHL) Sector

Among Tier-2 cities, Mohali demonstrates a notable proportion of fresher and junior-level recruitment, followed by Trichy and Kanpur in the PHL sector. In these three Tier-2 cities, the sought-after skills at this level include specialty doctors, research analysts, and API experts. This underscores the pharmaceutical industry’s robust commitment to training entry-level individuals in essential skills.

The aspiration of “Develop in India” holds significant importance within the PHL industry, with a high demand projected for these skills in both Tier-1 and Tier-2 cities. Hiring for the Indian PHL industry will accelerate significantly due to the serious pace of investments in this sector.

According to Kartik Narayan, chief executive – staffing at TeamLease Services, “Industries in the non-tech sector are actively promoting hiring automation specialists with expertise in 5G networks and talent with engineering and semiconductor backgrounds to support the growth of the telecommunications and consumer electronics businesses.”

Conclusion 

In a seismic shift, India’s job market is embracing Tier 2 and Tier 3 cities, fueled by concrete facts and promising trends. These cities, often overshadowed, are now pivotal to industries’ strategies. The rise is bolstered by tech giants like Apple expanding to Hubballi and Dharwad, while 54% of employers anticipate hiring from Tier 2 and Tier 3 cities, as per a Randstad report.

Industries are no longer confined by urban borders, evidenced by sectors like BFSI witnessing 82.02% junior hiring in Tier 2 cities. Manufacturing is a shining example, with 78.81% junior-level recruitment in these regions. The integration of Tier 2 cities into the IT sector’s talent strategy is also noteworthy, as 88.63% of hires are juniors.

This shift is a reflection of industries’ adaptability and a testament to Tier 2 and Tier 3 cities’ rise. It’s a movement where aspirations meet opportunity, creating a future where boundaries blur, economies flourish, and India’s job market evolves in unprecedented ways.