Table of Contents
Highlight
- Emerging Tier-2 Cities Driving India’s IT Growth: India’s tech sector is decentralizing from major metros, as Tier-2 cities like Jaipur, Mysuru, and Lucknow rapidly emerge as the new IT hubs.
- Strong Talent Pool and Cost Benefits: With 60% of engineering graduates from smaller cities and 25–30% lower talent costs, emerging Tier-2 cities offer a powerful mix of affordability and innovation.
- Government & Policy Support Empowering Growth: Backed by Global Capability Centers (GCCs), 7,000+ start-ups, and strong government & policy support, these Tier-2 IT cities are fueling sustainable tech growth across India.
India’s New Tech Map: Beyond Bengaluru and Hyderabad
When I envision the technological future of India, I no longer think only of megacities like Bengaluru or Hyderabad. Increasingly, I am visualizing places like Jaipur, Mysuru, or Lucknow – places that were once on the fringes but are now on the rise as incredibly viable IT hubs. The change is real and seismic, and a unique convergence of talent, infrastructure, and cost fuels it.
Why Tier-2 Cities Are Becoming India’s New IT Powerhouses
Decentralization of Work
According to the NASSCOM-Deloitte Emerging Technology Hubs study, India’s tech sector is in the process of gradually shifting or decentralizing the market from just a few major metro cities.
Strong Talent Pool
Approximately 60% of all engineering, arts, and science graduates are from smaller cities.
At the same time, at least 11-15% of tech talent already lives in Tier-2 and Tier-3 cities.
Cost Benefits
The cost of talent in these emerging cities is 25-30% lower than that of talent in established central hubs.
The report notes that real estate in these cities can be as much as 50% cheaper.
Lower Attrition Rates
While attrition rate may not be explicitly defined, many of the companies interviewed described a more stable workforce, in part because employees have stronger community ties and a lower need to migrate.
Government & Policy Support
Investment in infrastructure, incentives for Global Capability Centers (GCCs), and incubators friendly to startup companies are at an all-time high.
Emerging Tier-2 IT Cities – Key Cities to Track
More coming to light from the NASSCOM-Deloitte report are the key emerging Tier-2 IT cities. Here are a few:
- Chandigarh
- Jaipur
- Lucknow
- Bhopal
- Guwahati
- Bhubaneswar
- Coimbatore
- Mysuru
- Kochi
These cities not only invest in infrastructure but are also building inherent strengths. For example, Mysuru is reportedly developing into a hub for cybersecurity.
Infrastructure & Ecosystem Dynamics
Global Capability Centers (GCCs)
Global Capability Centers (GCCs) – 140+ GCCs from global enterprises have opened in these Tier-2 hub locations – reinforcing confidence in local hiring and operations.
Start-Up Ecosystem
Start-Up Growth – There are 7,000+ startups across the emerging hubs, across a multitude of sectors ranging from BPM to deep tech.
Five Pillars of Growth (NASSCOM Framework)
Pillars of Growth – The NASSCOM report outlines the five pillars—talent, infrastructure, risk/regulatory environment, social/living standards, and start-up ecosystem—to enhance these cities.
Economic and Social Impact
Job Growth – These cities don’t just create back-office jobs – but they are scaling up to engineering, R&D, and innovation jobs.
Quality of life – These emerging Tier-2 cities offer an attractive cost of living, less congestion, and, as social infrastructure improves, a quality of life not only for work but also for families considering a long-term lifestyle investment.
Reverse Brain Drain – As job opportunities expand locally, more young professionals are now staying in their hometowns or returning, and there are promising signs for reversing the brain drain of talent from mid-sized cities.
Challenges and Threats
Deficient Infrastructure: Not every Tier-2 city is equally prepared. Some do not have developed data centers, transportation, or power supplies.
Talent Quality & Upskilling: Even though there is currently a sizeable pipeline, specialized training and upskilling are still needed for some high-tech jobs (AI, advanced dev).
Policy Variability: Incentives, programmatic support, and regulatory frameworks differ significantly across cities and states.
Retention Risk: Without continued investment in community and opportunity, the states may face similar talent outflow issues as metros grow.
Why Companies Are Investing Here
Cost Savvy: Factually lower commercial realty & labor costs make expansion easier to sustain.
Strategic Diversification: By having a presence in different cities, companies can begin to offset risks [e.g., realty or talent saturation in metros, etc.].
Talent Pipeline: In larger towns, most new graduates come from smaller towns. Companies can build their long-term talent pipelines into Tier-2 cities, as well.
Sustainable Growth: Tier-2 cities offer a more balanced approach to overheated Tier-1 markets.
Future Trajectory
More GCCs will form in emerging hubs. We will see an increasing number of AI & deep-tech start-ups in Tier-2 cities. Governments will lean into support – more “tech corridors,” incubators, and programmatic frameworks as hybrid and remote work continues to rise.
Conclusion
Being an advocate of equitable growth, it is very encouraging to see the emergence of Tier-2 tech cities in India. They are not merely a cost-cutting move for companies; they are becoming sites of innovation, promise, and worthwhile permanence. The future of tech in India over the next decade may emerge from these previously underestimated cities.
