Small cities may beat metros in percentage salary hikes 

To retain talent base in tier II cities, companies are churning out bigger percentage hikes in comparison to metro/tier I locations, say recruiters

Apeksha Kaushik, TimesJobs.com 

Companies expanding into tier II cities and regions such as Punjab, Madhya Pradesh, Uttar Pradesh, West Bengal, Kerala and some North-Eastern states have emerged as new avenues of growth.

Most organisations that have expanded in tier II and III cities are saving cost by 10-20 per cent, says a NASSCOM report. All this is pushing up demand for talent in tier II locations. 

Better payouts

To retain talent base in these locations, companies are churning out bigger percentage hikes in comparison to metro/tier I locations. With a lower benchmark rate, salary hikes in small cities may be high in comparison to big cities. 

“Tier II cities have a much lower benchmark of around 30-40 per cent in comparison to big cities/metros. Thus, giving out salary hikes will look higher in percentage but may be lower in absolute increase,” Sunil Goel, MD, GlobalHunt, an executive search firm, told TimesJobs.com.

Tier II cities have been the target geographies for large IT, ITeS, e-commerce and services companies. “Sectors that are able to manage back office operations through technology connectivity find the resources at much better price in small towns. Stability is also higher and reduces hiring and training cost,” Goel said. 

Premium profiles

IT/ITeS and manufacturing companies are increasingly setting up operations in tier II and III cities as it equips them to cater in regional languages, especially for domestic clients.

Over 35 per cent jobs in tier II and III locations belong to the manufacturing and IT/telecom sectors, according to TimesJobs.com data. Since demand is primarily driven by manufacturing and IT/telecom, there is a huge demand for engineers and IT staffers.

Engineers, sales, business development and IT/telecom professionals account for nearly 50 per cent of the total demand in tier II and III locations.

Accounting and finance profiles are also sought after in small locations, shows TimesJobs.com data. “IT-customer service, inside sales, contact centre, finance AR and AP roles and shared services positions may see maximum hike in these locations,” added Goel. 

Location matters

While most large corporate houses do not differentiate annual salary increase based on cities, tier II locations are becoming more attractive for IT, ITeS and service industries because of higher retention of talent, Dr Aquil Busrai, CEO, Aquil Busrai Consulting told TimesJobs.com.

“These industries are willing to pay a premium to recruit talent from tier II cities. In select positions, compensations are almost nearing the tier I city norms,” said Busrai.

This trend to move towards tier II cities for setting up operations will gain momentum. “I foresee e-commerce hubs in retail sectors coming up in tier II cities. This will spur demand for related skill-sets at a premium,” explained Busrai.

The salary hikes this year are expected to be in the range of 8-14 per cent for most sectors and locations across the domestic market, said Aditya Narayan Mishra, president-staffing, Randstad India.

“In tune with last year, the raise for top performers is expected to be around 1.5 times or higher than that of average performers,” Mishra told TimesJobs.com.