Small cities, big growth: Hiring scene hots up in Tier 2, 3 cities

India’s employment landscape is undergoing a quiet but profound transformation. Once overshadowed by major metropolitan hubs like Bengaluru, Mumbai, Hyderabad and Gurgaon, smaller cities such as Udaipur, Vizag, Warangal, Lucknow and Indore are now emerging as dynamic centres for job creation. Over the past few years, India has witnessed a fundamental shift in its employment geography, reshaping the traditional narrative that top-quality job opportunities are confined to metropolitan cities. As the economy diversifies and technology becomes more deeply embedded across sectors, smaller cities and towns are beginning to take centre stage in the country’s job creation story.

Small cities outperform big cities
Smaller cities from Udaipur to Vizag and Coimbatore to Nagpur grossly outperformed India’s established technology hubs and other metros for growth in hiring for traditional software and IT-specific jobs in the first half of 2025 from a year earlier, according to an ET report. Tier-II and -III cities posted a more than 50% increase in these hirings during the January-June period, show data collated by Teamlease. The tier-1 cities, which include Bengaluru and the National Capital Region, posted 12–15% growth.

“In 2025, India’s IT services sector is witnessing a significant hiring shift toward tier-II and tier-III cities,” Teamlease Digital chief executive Neeti Sharma told ET. While the hiring momentum in smaller cities has been picking up for the past few years, especially after the pandemic, Sharma said the growth since last year has been on a completely different scale. While Coimbatore, Nagpur and Nasik are growing around 20–25% year-on-year, Indore and Jaipur are recording 30–40% expansion in hiring for IT hiring. Supporting functions hiring growth stood at 24–31% in tier-II and -III cities while 8–15% in tier-I cities, showed the Teamlease data.

As per recruitment firm CIEL HR, Mysuru has emerged as a frontrunner among tier-II cities in emerging technologies, including generative AI, accounting for 32% of the hiring in that space. Jaipur continues to dominate across both voice and non-voice roles, while Coimbatore showcases a balanced demand across all tech job families, it said.

“Cities like Bhubaneswar, Indore, Udaipur, Vizag, Lucknow, Ahmedabad, Vadodara and Warangal are witnessing impressive growth, driven by government initiatives, IT infrastructure investments, and the expanding footprint of global tech firms. Bhubaneswar, a Smart City, is gaining ground in KPO hiring (21%) due to the growth of finance-tech platforms,” Aditya Narayan Mishra, managing director and CEO at CIEL HR, told ET. According to Sharma, “The accelerated growth is a reflection of a structural transformation driven by improved digital infrastructure, government policies to attract employers and employees and the mainstreaming of hybrid and remote work models.” Also, because of high competition from startups in tier-1 cities and the convenience provided by remote or hybrid work models, technology companies are recruiting local talent from engineering colleges in smaller cities.

Hiring in India's smaller cities is booming
Small cities and towns have recently witnessed a sharp surge in hiring - more than double the pace seen in metros - driven by robust growth in the BFSI, manufacturing, retail, and IT sectors, TOI reported last month. This trend marks a significant shift towards decentralised economic growth, underscoring the rapid rise of tier-2 cities as emerging talent hubs, with opportunities now expanding beyond traditional urban centres.

Job openings in tier-2 cities rose nearly 42%, compared to a 19% increase in tier-1 cities, according to the Randstad Talent Insights Report 2025 shared exclusively with TOI. The first edition of the report, drawn from data in the six-month period - Sept 2024 to Feb 2025-captures insights across six key industries: banking, financial services & insurance (BFSI), manufacturing and automotive, IT, pharma, healthcare & life sciences (PHL), retail, FMCG & FMCD, and energy and utilities.

Anjali Raghuvanshi, chief people officer & senior director (business innovation) at Randstad India, a talent company, said, "Our report indicates that tier-1 cities maintain a robust hiring outlook across all surveyed sectors. More interestingly, tier-2 and 3 cities are rapidly gaining ground, emerging as hiring hotspots, thus reflecting the vast potential and widespread distribution of talent across the country. The impressive growth trajectory of these cities can be credited to their growing economic relevance, a steady pipeline of skilled talent from quality educational institutions, and a concentrated push towards infrastructure development."

Gandhinagar and Aurangabad joined the list of tier-2 cities in this edition. During the period, Vadodara showed a big surge in hiring numbers, rankings, and share of demand at all levels in the energy & utilities, PHL, and automotive & manufacturing industries. Further, under the BFSI sector, investment banking, business operations, and business analyst roles take the top three spots in terms of hiring demand across all levels. The role of a cyber fraud analyst entered the skill portfolio for the first time to feature in the Top 20 skills.

With more advanced cyber frauds in the digital age, the role has opened up job opportunities, both in tier-1 and tier-2 cities, the report adds. In the manufacturing and automotive sector, production managers, supply chain/logistics professionals, and operations management specialists continue to dominate the hiring demand.

Reverse migration
Tier 2 and Tier 3 towns are now creating job opportunities that can help employees shun metros and still have a career. As consumption spikes, infrastructure grows and education improves in small towns, companies seeking cost advantage across sectors are expanding to Tier 2 and Tier 3 towns which can mean jobs for people who have hitherto worked only in metros and other big cities.

ET had reported in March that thousands of new jobs will get created in the hospitality sector in several small towns this year because hotel chains are now going to remote locations. Senior executives at leading hotel chains told ET their companies will invest CSR funds on skilling and upskilling locals and also go for reverse migration, enabling existing employees in metros and big cities to move back to their hometowns.

Job opportunities are growing across sectors in Tier 2 and 3 cities, and professionals are eager to join, recruiters and companies had told ET last year. Madhuri Mehta real estate developer Emaar India's the chief HR officer had told ET that whenever the company announces a new project in a Tier 2 city, her LinkedIn account gets flooded with messages from professionals looking for jobs back in their hometowns. “These people are a potential talent pool,” said Mehta, citing instances of professionals who wanted to move back home, for instance, from Delhi to Mohali. She said Emaar was hiring actively in cities like Indore, Jaipur, Mohali and Lucknow, where they had projects running.

While escalating living costs and mounting infrastructural challenges in metros are prompting executives to move to smaller cities, companies, on their part, are drawn by cheaper land costs, lower salaries and easy talent availability, besides rising disposable incomes in these cities. Active tier 2/3 white-collar job openings on popular job boards and portals have grown by 41% year on year, data shared with ET last year by recruiting firm Xpheno showed. While overall active openings came down from the peak hiring buoyancy of 2021, cities like Bhubaneshwar, Dehradun, Solapur and Mysuru saw y-o-y growth rates ranging from 3x to 8x. Those hiring in smaller cities included Bajaj Finserv, IBM, Accenture, Infosys, Genpact, Vodafone Idea, Airtel, Infosys BPM, IDFC First Bank, HDFC, the data showed.

Companies are not just hiring people who want to move back to their hometowns; they are actively tapping local talent as well. “Instead of hiring talent from smaller cities and placing them in offices in metros, we are taking our offices closer to talent pools across India,” Thirukkumaran Nagarajan, HR head at IBM India/South Asia, told ET last year. The technology company has expanded to cities including Gandhinagar, Bhubaneswar, Kochi, Mysuru and Coimbatore. “Due to low operational costs, industrial growth has now moved beyond metropolitan areas,” Sekhar Garisa, CEO of talent management platform foundit, had told ET last eyar. “Also, remote work and technological advancements have facilitated the decentralisation of businesses, allowing them to operate efficiently from tier 2/3 cities while still accessing global markets.”

Multinational jobs are also headed to small towns
Tier 2 and Tier 3 towns in India are also set to attract top multinational jobs in future. Expansion in non-metro hubs will be a significant aspect of the global capability centre (GCC) boom in India in the coming years, with GCCs in tier-II and tier-III locations expected to grow 15-20% by 2025, suggest data sourced recently by ET from ANSR that helps multinationals set up these facilities.

Factors such as growing tech talent pools, favourable government policies, operational efficiencies, lower costs of living than in big cities, and hybrid work models will fuel this trend, experts said. The emerging cities poised to benefit from this expansion include Ahmedabad (GIFT City), Kochi, Coimbatore, Chandigarh, Thiruvananthapuram, Jaipur, Visakhapatnam, Vadodara, Nasik, Bhubaneswar and Indore. “These locations offer a compelling value proposition — enhanced quality of life, lower cost of living and less competition for talent,” Vikram Ahuja, cofounder of ANSR and CEO at workforce management platform Talent500, told ET in December. Non-metro cities house more than a million tech professionals, particularly in fields like artificial intelligence, cybersecurity and big data, Ahuja said.