Tech companies plug into India's smaller cities for talent

MADURAI/BENGALURU — Indian engineer B. Ramachandran now prefers living in the smaller cities than the major tech hubs of Bengaluru and Chennai.

After the pandemic, the 47-year-old moved to Madurai, a temple town in the southern state of Tamil Nadu. He has no plans to leave his hometown, saying the chance to live with his ageing mother while working for New York-based technology services firm Genpact is a "blessing".

IT companies are now expanding into smaller cities, in part to tap on workers like Ramachandran, and to capitalise on cheaper land costs, rents and wages.

Some are already finding it easier to hire staff in tier 2 cities, in contrast to before the pandemic when workers largely went from smaller cities into the country's major IT hubs for jobs.

"The HR and I used to drive down to Bengaluru and Chennai to interview experienced talent and convince them to move to Madurai," said Selvaganesh M.P, founder of IT firm SMI that was bought by mid-cap IT company Happiest Minds in 2023. "This is no longer needed as the equation has changed after COVID-19."

US-based Cognizant and India's Tata Consultancy Services, Infosys, HCLTech, and Wipro, are moving into smaller cities due to cost efficiency, government incentives and availability of talent.

HCLTech has two offices in Madurai with 6,700 employees. It had originally aimed for 5,000 staff by 2025, which it exceeded, as a result of pandemic-induced demand. It also expanded its workforce in tier 2 locations such as Nagpur in Maharashtra state, Vijayawada in southern Andhra Pradesh state and Lucknow in the northern state of Uttar Pradesh since the pandemic.

Industry watchers say the trend to smaller cities helps companies reduce attrition and cut costs at a time when the