Article: Hiring woes in Tier 2 & 3 cities

Talent Acquisition

Hiring woes in Tier 2 & 3 cities

Organizations have recently shifted their focus to tier 2 & 3 cities for their talent requirements
Hiring woes in Tier 2 & 3 cities

Availability of talent was never a problem in India for industries considering the number of educational institutions and the employable candidates emerging out every year. With the Indian economy expanding in the last one decade prompting all-round growth, Automotive, BFSI, ITeS, Manufacturing and Real Estate sectors have been hiring more talent than before.

It has been a practice for the MNCs to focus only on the metro cities for talent acquisition. However, over the last couple of years, they have shifted their attention to tier 2 and tier 3 cities because of various factors. The main reason for this being the higher catchment area, lower attrition rate among candidates from such regions, and cost arbitrage from the talent perspective. Secondly, from the company perspective, the operational expenditure is minimized. This trend of acquiring talent from tier 2 and tier 3 cities was visible in the BPO industry initially, but soon other industries followed this trend.

There are few integral steps in hiring such as understanding recruitment, source, select, offer and hire. Sourcing the right candidate for a job being one of the most critical elements in hiring, it is worth a discussion, and has assumed significance in the HR fraternity. . There are two most popular methods of identifying the candidates - one is reaching out to the aspirants through different available mediums and techniques, and the other is by fostering a relationship with the candidate to fill up the job position.

It is often seen that there is a difference between the aspirants’ understanding of the eligibility and the employer’s expectation from the candidate. A job aspirant might assume that education, experience and skill sets suit the job profile perfectly, whereas the employer is assigning importance to the aptitude and team spirit of the candidate. But this problem is profound while hiring candidates from tier 2 and tier 3 cities where candidates are not suitable to take- up any particular responsibility though they possess the necessary academic qualifications.

Owing to the lack of orientation / accessibility in these areas, many of the candidates do not read magazines or newspapers to keep themselves updated with the recent changes taking place in the industry, as a result of which they are completely unaware about the current market scenario. Most of the noted educational institutes in the country are in the metro cities and they are expanding into tier 2 and tier 3 cities. But often the same institutions do not attempt to keep their students updated about the industry trends or the changing job scenario in the metros. Consequently, the major challenges for companies, which try to acquire talent from these areas, are several. Lack of industry knowledge, latest employment trends, job dynamics and inadequate hands-on experience affects their Prospects at all stages.

For firms that are expanding their presence to tier 2 and tier 3 cities as part of their long-term growth strategy, identifying the right local talent is a major hurdle. Working professionals from the metro cities are highly reluctant to relocate to these 2 and 3 tier cities because of various reasons. At the same time, the firm cannot fully rely on the local talent and is forced to source candidates from different geographic regions.

All these do not conclude that hiring the right talent is impossible in the tier 2 and the tier 3 cities. A survey of the job market conducted recently in various parts of the country revealed that Ahmedabad is leading the pack of tier 2 cities in hiring. The study mentions that the city provided 120,000 jobs in 2013, even when the market was sluggish. A majority of this hiring has been done in pharmaceutical companies, followed by textiles, chemical industry, BPO and infrastructure companies.

A number of companies are also setting up their R&D Centres in tier 2 and tier 3 cities. Most start-up companies in the tier 1 cities are also expanding to the tier 2 cities to take advantage of the lower cost of operations. As most of the IT talent is sourced from small towns, the government should start focussing more on improving the basic infrastructure and finishing schools in these locations in order to help other companies to hire talent and also help retain them.

According to a Nasscom study, “Driving India’s Socio Economic Transformation,” tier 2 and tier 3 cities in India have emerged as major talent hubs from where various industry sectors are recruiting human resources.

Another study by McKinsey Global Institute shows that as India has a young and a rapid growing population with a potential demographic dividend, it would need thriving cities if the dividend has to be paid out. Thus it is important for the government to pay more attention to growth in the tier 2 and tier 3 cities, which if not done will not only prove costlier for India but will gradually worsen the urban development, thus leading to a declining class.

Despite this factor, the participation of the tier 2 and tier 3 cities in the national hiring is not as much as it should be, particularly in a country like India where almost 70 per cent of the population lives in villages and sub-urban areas.

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Topics: Talent Acquisition, #HRInsights, #Trends

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