Towns Outpace Metros in White-Collar Jobs

Tier 2, 3, and 4 Cities Outpace Metros in White-Collar Job Creation in 2023


A recent study conducted by the recruitment platform My RCloud has revealed that smaller towns and non-metro cities in India have surpassed major metropolitan areas in the creation of white-collar jobs in 2023. This phenomenon is primarily driven by the manufacturing and financial services sectors. Tier 2, 3, and 4 cities have collectively added a remarkable 1.7 million white-collar jobs, surpassing the 1.5 million jobs added in major Tier 1 cities.

Towns Outpace Metros in White-Collar Jobs

Defining White-Collar Jobs

White-collar jobs encompass roles such as office administrators, bankers, accountants, engineers, and other skilled professions that do not entail manual labor. The study tracked the hiring trends, both new and replacement lateral hiring, visible on platforms such as LinkedIn and various job portals across more than 1000 companies.

Factors Driving White-Collar Job Growth

The growth of white-collar employment in smaller towns and non-metros can be attributed to two main factors:

1. Manufacturing Expansion

Manufacturing firms are increasingly establishing new factories and expanding their production capacities in small towns, contributing significantly to job creation in these regions.

2. Financial Services Expansion

The financial services sector, including banks and non-banking financial companies (NBFCs), is driving demand by expanding their branch networks into non-metro areas.

Notable companies involved in this hiring surge outside of metropolitan areas include Borosil, Saint-Gobain, Tech Mahindra, and ArcelorMittal. The highest demand is observed for professionals with 6-10 years of experience, with annual packages ranging from ₹7-10 lakh.

Implications for Retail Investors

Identifying Investment Opportunities

Retail investors can benefit from this development by identifying companies that are at the forefront of setting up manufacturing and service infrastructure in India’s smaller towns and non-metro regions.

Potential Investment Opportunities

  • Engineering & Construction Firms: Companies like KNR Constructions and Sanghvi Movers that support industrial expansion.
  • Private Banks: Institutions such as Federal Bank and Karur Vysya, which focus on regional presence.
  • NBFCs: Entities like Muthoot Finance that provide credit access.
  • Education Companies: Organizations like Zee Learn, which offer workforce training for these jobs.

Furthermore, as per capita incomes and consumption rise in rural areas due to increased white-collar job creation, consumer stocks like Dabur, Marico, and JK Tyre are likely to experience sustained growth from greater product penetration in these markets.

Short-Term Considerations

In the short term, positive sentiment may surround stocks in these sectors due to visible evidence of accelerated job creation and economic vibrancy in non-metro regions. However, investors should evaluate the impact on individual companies based on factors such as geographical exposure, revenue mix, and alignment with the reported trends.

Impact on Industries

Industries Poised for Growth

Several industries are poised to benefit directly or indirectly from the surge in white-collar job creation in India’s small towns and lower-tier cities:

1. Manufacturing

As per the report, manufacturing is already a leading job creator in non-metro areas and is expected to necessitate more production, supply chain, and ancillary infrastructure, thereby generating additional jobs in construction, engineering, and related fields.

2. Banking & Financial Services

The banking and financial services sector is likely to tap into the rising demand for banking and credit services from both retail and industrial clients. This expansion will create direct jobs, and increased prosperity will enable additional revenue generation through new distribution channels.

3. Education & Training

To cater to the demand for white-collar jobs, more vocational institutes and training centers will need to be established in non-metro areas, offering specialized training to meet localized job requirements.

4. Consumer Services

Categories such as restaurants, healthcare, and entertainment are expected to witness increased demand as incomes rise in non-metro locations due to the growing white-collar workforce, resulting in the creation of related jobs.

5. Urban Development

The development of organized residential and commercial infrastructure will become essential to attract and retain the non-metro workforce. This growth will benefit industries related to construction, housing, and allied sectors.

Long-Term Implications

Potential Long-Term Benefits

  • Reduced pressure on overcrowded Tier 1 cities through the development of distributed urban clusters.
  • A decrease in rural-to-urban economic migration, leading to the retention of families and the social fabric in native locations.
  • Faster development of logistics and connectivity infrastructure, connecting smaller cities, towns, and villages, ultimately raising national productivity.

Potential Long-Term Negatives

  • Speculative increases in real estate prices in specific towns experiencing a sudden influx of jobs, potentially making housing unaffordable for lower-income groups.
  • Pressure on local civic amenities and resources to support rapid population growth, leading to infrastructure gaps and a decrease in the quality of living index unless addressed proactively.

Short-Term Considerations

Short-Term Benefits

  • Addresses India’s urgent need for generating a more skilled working population by increasing the share from Tier 2, 3, and 4 regions, which have a massive aggregate population base.
  • Initiates the development of new urban clusters beyond the top 7-8 Indian cities, driven by employment opportunities in manufacturing and financial sectors.

Short-Term Negatives

  • Towns experiencing a sudden job influx may witness inflation, especially in rental accommodation, transportation, and food, as local resources face unexpected supply-demand mismatches.
  • Unplanned urban clusters may lead to the emergence of shanty towns unless proactive urban planning anticipates and prepares for expected expansion.

Companies Impacted by White-Collar Job Growth Beyond Metros:

Indian Companies Gaining:

  • Manufacturers with Non-Metro Focus:

    • Borosil India: Mentioned in the article, their hiring focus aligns with the trend and could boost investor sentiment.
    • Saint-Gobain India: Similar benefit from their 25% non-metro fresh recruit intake, highlighting commitment and attracting talent/investors.
    • Companies mentioned by Ramachandran: Steel, machinery, carbon product, and QSR firms with non-metro expansion plans stand to gain from the wider talent pool and market growth.
  • Financial Services Companies:

    • Regional banks and insurance companies with strong non-metro footholds could see increased market share and growth thanks to rising white-collar demand.
  • Tier-II/III Companies:

    • Companies already established in these areas might benefit from increased economic activity and talent availability.

Indian Companies Potentially Losing:

  • Metros-Centric Tech Companies:

    • May face increased talent competition from companies expanding into smaller cities.
    • Potential slowdown in hiring compared to non-metro counterparts.
  • Metros-Centric Real Estate Developers:

    • Growth might lag behind non-metro developers benefiting from the job boom.

Global Companies:

  • Limited Impact: Primarily domestic trend, though global investors might view it as a positive indicator of market expansion and stability.

Overall Market Sentiment:

  • Positive for companies actively leveraging non-metro growth: Mentioned companies and those in relevant sectors could see a boost.
  • Investors: Might view this as a diversification opportunity and access to new talent, potentially boosting sentiment in relevant sectors.
  • Metros: Mixed reaction possible. Concerns about talent competition and slower growth in some sectors might be balanced by overall economic benefits of national expansion.

Remember: This analysis is based on the available information and individual company impacts can vary depending on their strategies, financials, and future job market developments. Consulting a financial advisor for personalized recommendations is always advised.

I hope this analysis is helpful! Let me know if you have any other questions.

Proper Citation:
ET Bureau. (2023, December 21). Towns Outpace Metros in White-Collar Jobs. The Economic Times.

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