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Firms are moving away from metro campuses to smaller towns

GS Paper 1

 Syllabus: Geography: Location of Industries

  

Source: TH

Context: The IT industry association Nasscom and Deloitte released a report highlighting that there are now 26 emerging destinations in India, beyond the 7 metro hubs, which offer promising opportunities for investments.

 

Reasons for Migration of Firms to Smaller Cities:

Reasons Example
Remote and hybrid work models Companies like Cognizant allowed employees to work from anywhere (during the pandemic), leading to a shift away from major cities.
Companies can establish satellite offices in smaller cities, supporting remote and hybrid work models.
Cost savings Moving to smaller cities allows companies to reduce real estate costs and invest more in people and R&D.
Employees can save more in terms of rental costs and experience social benefits in smaller towns.
Rich talent pool Smaller cities have untapped talent with a potential talent drain to larger metros, providing opportunities.
Higher retention rates Employees prefer to stay in their hometowns, leading to higher retention rates in smaller cities.
Availability of office space Smaller cities like Coimbatore offer quality office spaces with amenities at lower costs compared to metros.
Rise of co-working spaces in smaller cities Co-working spaces provide access to high-quality office space at a fraction of the cost in larger cities.
Counter-magnet dynamics Surat and Pune have started acting as a counter-magnet region to Mumbai and attract migrants from the neighboring districts of Maharashtra.

 

Implications of this shift:

Actors involved Positive Implications Challenges
Companies Cost savings in real estate. Infrastructure limitations.
Access to untapped talent pools. Investment in employee amenities.
Employees Lower living costs. Adapting to different living environments.
Reduced commute times. Limited access to certain urban amenities.
Local Communities Economic growth and Increased job opportunities.  The strain on local resources and infrastructure.
Real Estate Sector Increased demand for office spaces. Potential oversupply.
Potential for real estate development. Infrastructure planning challenges.
Government Regional development. Infrastructure investment is required.
Reduced pressure on major metros. Addressing disparities in development.
Large Metros Reduced congestion. Reduced demand for office space.
Potential cost of living reduction. Potential economic shifts.

 

Conclusion:

This development favours that now the people from smaller towns in India might enjoy better lifestyles and ample employment opportunities in their own regions compared to 20 years ago.

 

Insta Links:

Human Migration

 

Mains Links:

What are the main socio-economic implications arising out of the development of IT industries in major cities of India? ( UPSC 2021)

Discuss the changes in the trends of labour migration within and outside India in the last four decades. ( UPSC 2015)