India continues to offer an attractive proposition for global companies, given the unique combination of low-cost, scalable English-speaking talent pool, and the breadth & depth of available skills. As the global digital services industry matures, there is a gradual shift in the mix of locations being leveraged. With increasing competition, companies are looking to reduce costs of service delivery and access additional untapped pools of talent. Tier-2/3 cities offer cost savings potential over tier-1 cities as well as lower congestion/competition for talent typically.

In recent years, activity in tier-2/3 cities in India has witnessed a significant surge, as both enterprises and service providers realized these benefits in their quest for achieving further savings and accessing untapped talent pools. At the same time, these cities offer certain challenges such as lack of depth of talent and relatively inferior quality of infrastructure. The report takes a closer look at the value proposition offered by tier-2/3 locations in India as delivery destinations for the global digital services industry.

In this research, we analyze tier-2/3 cities in India as destinations for offshore digital services delivery for global companies

The report is broadly divided into four sections:

• Market characteristics of tier-2/3 cities
• Value propositions offered by these cities for digital services:
  • Talent pool analysis: both entry and experienced level
  • Operating cost
  • Operating and business environment assessment
• Everest Group Location PEAK Matrix™ for digital services
• Key drivers and challenges for digital services delivery from tier-2/3 cities

The scope of analysis includes:

• Services – digital services (see next page for definition)
• Geography – key tier-2/3 cities in India: Ahmedabad, Chandigarh, Coimbatore, Indore, Jaipur, Kochi, Lucknow, T-puram, and Vadodara
• All service delivery models including Global In-house Centers (GICs) and third-party Service Providers (SPs)

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