Tuesday, June 18, 2024

India Tech Industry Decentralising to 26 Cities from 7 Significant Hubs: Report

The technology industry in the past decade has witnessed rapid change, with more focus on digitalisation than before, the era defined as ‘techade’ The majority of the IT professionals are residing in major urban hubs like Bengaluru, Hyderabad, and Pune. However, an extensive 220-page report by Deloitte and NASSCOM indicates a decentralized trend spreading its roots across 26 cities in the country.

In this article, we will delve into the technology landscape in India, the rise of Emerging Technology hubs, and key findings from the report. Read on!

Technology Landscape in India

India has given phenomenal performance by gaining the #1 rank in the world for talent & sourcing within the technology sector globally and enjoyed a leadership position.

India has emerged as a leading ‘Digital Talent Nation’ and is leading the race to become the global digital technology hub.

The technological advancement in India has positioned itself in the following ways:

1. It has a well-developed technology ecosystem and has become the preferred destination for establishing and expanding business operations.

2. The country is best renowned for having the lowest demand-supply gap for tech talent among all the countries in the world.

3. India is the only country to have a skilled talent surplus by 2030. It has also strategically placed itself to meet the growing digital talent requirements.

The technology industry in India has shown tremendous growth and has been growing at a CAGR of 9 percent since fiscal year 2019.

In the fiscal year 2022, the technology sector achieved a total revenue of around US$ 227 billion. It is projected to reach US$ 245 billion by 2023, reflecting a Compound Annual Growth Rate (CAGR) of 9 percent since the fiscal year 2019. The industry’s service portfolio has expanded significantly, with strong growth observed in segments such as engineering, research, and development (ER&D) and software products, alongside the more traditional information technology and Business Process Management (BPM) services.

Why India’s Tech Industry is Getting Decentralised?

Earlier, the country had the top-shot urbane technology industry that had clubbed major cities like Bengaluru, Hyderabad, and Pune. However, a notable shift is underway, challenging this centralized paradigm. Now, the tech sector is decentralizing with companies expanding their operations to various cities across the country.

Decentralizing from the seven major hubs, including metropolitan hubs, to 26 cities including Chandigarh, Nagpur, and Kanpur with representation from tier-2 and tier-3 towns as well

Deloitte India Partner Sumeet Salwan said, “While big cities were the focus in the past, the post-pandemic era witnessed a remarkable decentralisation of work across the nation.”

The upcoming wave of technology hubs is arising in cities such as Chandigarh, Kanpur, Ahmedabad, Mangaluru, and Nagpur. These cities offer compelling incentives, including reduced operational costs, enhanced access to talent pools, lower attrition rates, and state government backing in terms of infrastructure and policies. Notably, companies like Infosys, Wipro, HCLTech, and WNS have established their presence in one or more of these emerging centers.

Deloitte and NASSCOM Report

Deloitte and NASSCOM Report sheds light on the Emerging tier-2 hubs in India

Comprehensive report that showcases insights into 26 locations that have the potential to offer tremendous opportunities for enterprises. The report examines the five crucial pillars: talent, infrastructure, risk & regulatory environment startup ecosystem, and social and living environment essential in building a flourishing technological landscape.

In addition to this, the report also delves into the understanding of the current landscape and showcases factors that enterprises must take into account while preparing an effective strategy.

  1. India is the “Digital Talent Nation” & Surplus of Skilled Talent

India is on the verge of becoming the most prominent global technology hub. Currently, 11-15% of India’s tech talent resides in tier 2 & tier 3 cities, and the majority of top IT professionals are in the top major cities of Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, and Pune.

Sukanya Roy Head-GCC and BPM NASSCOM shares the plight of India, she says

“India is expected to have a skilled talent surplus by 2030. These hubs offer companies a compelling blend of advantages: access to a fresh, skilled talent pool, cost-effective operations, and robust infrastructure”

The report highlights 26 locations have the potential to become the epicenter of innovation & economic growth. This trajectory is driven by a highly skilled workforce specializing in advanced digital technologies, with approximately 800,000 individuals in these emerging centers being proficient in the latest tech fields. These emerging cities are witnessing a surge in digitally skilled workforce, with over 100,000 professionals contributing to their growth.

  1. Emergence of Startups

As per the report, close to 7,000 startups are operating from the developing hubs and industries spanning from BPM services to DeepTech. These businesses have significantly grown by 50% between 2014 to 2018. The growth is projected to increase by 2025.

There is another striking feature that shows that start-ups from the tier 2 cities in India have received 13% of the investment in 2022 which implies investors are inclined to explore outside the metropolitan areas for potential unicorns. 

  1. Cost-Effective Destination for Business Growth

Companies benefit from a significant cost advantage, with talent pool expenses being 25-30 percent lower and real estate rentals a remarkable 50 percent less compared to established hubs. This cost-effectiveness renders these cities an appealing option for expansion without straining financial resources excessively. Corporations are rapidly adopting this trend, with more than 140 Global Capability Centers (GCCs) now established in these places, indicating the increasing interest of international companies in these promising emerging hubs.

There are emerging technology hubs in India. According to the Deloitte and NASSCOM Report, the technology sector in India is experiencing decentralization and dispersing across 26 locations that include Chandigarh, Nagpur & Kanpur.

  1. Economic Strength and Creative Innovation

In addition to their cost-effective appeal, tier-2 cities have evolved into fertile grounds for innovation, fostering a symbiotic partnership between startups and established corporations. Over the last ten years, this vibrant ecosystem has transformed the industry, generating approximately 900,000 direct and 300,000 indirect job opportunities. These emerging hubs are home to around 7,000 startups that make up 39 percent of the country’s startup ecosystem, spanning diverse industries from DeepTech to Business Process Management (BPM). In a nutshell, India’s tech industry’s journey from seven significant hubs to 26 cities signifies a promising shift in the country’s economic landscape. It reflects a broader trend of decentralization, harnessing the potential of talent and resources spread across the nation. As technology continues to reshape the way we work and live, the diversification of tech hubs in India promises a more inclusive and dynamic future for the industry and the country as a whole. For more insights, read the Deloitte and NASSCOM Report.

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