The great migration in T.N.: away from metros, towards small towns Premium

The idea of retaining talent in IT/ITeS sectors has become frustratingly painful, after the COVID-19 pandemic, when office rules were relaxed or suspended, for corporates to allow for hybrid working and work-from-home models, leading to sections of the workforce moving back to their hometowns. It has become nearly impossible to return to a pre-COVID situation, forcing companies to innovate. Some of them have found value in moving to tier 2/3 cities that now offer a number of advantages

The COVID-19 pandemic made a hybrid work environment, work-from-home or a work-from-anywhere model possible, especially for the Information Technology and Information Enabled Services (IT/ITeS) sectors. Post the pandemic, IT companies that have operations in major cities, are finding it difficult to bring employees back to offices and are now looking to go to smaller cities to retain talent.

As per data available on the website of Guidance Tamil Nadu, the State’s nodal investment agency, the IT/ITeS sector provides direct employment to nearly 6,61,000 people, and accounts for 11% of the share of total investments in this sector in India.

Recently, IT major Cognizant said that in the post-pandemic era of hybrid and redistributed work, it is looking to rationalise workspaces, especially in India’s largest cities, by redistributing some real estate to smaller cities. This structural shift would help eliminate 80,000 work stations and 11 million square-feet of work space in large cities in India, it said.

Cognizant, which has a major presence in Chennai and Coimbatore with over 80,000 employees, said it will also invest in collaboration spaces in smaller cities across India and with this, it expects to reduce its annual real estate costs by about USD 100 million by 2025, from 2022.

Industry officials confirmed that many IT companies are looking at shifting some of their operations to smaller towns to retain talent, bring down attrition levels and also to save costs amid an uncertain global demand environment.

One successful company, which moved early on into a small town, is Zoho. “We opened our first rural office in Tenkasi in 2011 to support our conviction that you don’t have to be in Silicon Valley to build world-class software. That conviction was validated when we launched Zoho Desk, our help-desk software, from there in 2016,” Praval Singh, vice president, Zoho Corp, said.

“In 2020, when our employees started working from their hometowns during the pandemic, we expanded our rural revival efforts and have now opened over 30 spoke offices across India, largely in tier 2/3 towns and villages from where our employees hail,” Mr. Singh said. “In 2021, we commissioned a study to study the impact our presence in Tenkasi has had over the past decade. The study revealed that there were several areas of positive impacts including growth in overall income, women empowerment, education and skill-building, employment, and community development,” he added.