Emerging Cities: Beyond Metropolis
In present scenario, the competition for establishing new businesses or expanding existing business is increasing in metro cities. Due to this the cost of living and even the infrastructure costs are rising rapidly. In order to overcome these problems in tier 1 cities, MNC’s/corporate giants/ major IT service providers are looking to establish their companies in emerging cities. Many other factors like insufficient transportation facilities and high pollution rate also add to the need for establishing business in other emerging or tier 2 cities.
In order to startup a business in an emerging city a detailed analysis is required to find out the optimal location, depending on the available talent pool and available facilities based on the chosen domain. Market research plays a vital role in analyzing and deciding these factors. Many market research companies are working on emerging cities. These research reports help the MNC’s or startups to decide where to invest and to find a location with desired talent pool. They are necessary to know about the technical talent availability, to know the status of the city in terms of infrastructure and transportation facilities.
The companies which are into manufacturing sector like automotives, cement, steel etc., need huge space for manufacturing purpose and in case if they are planning to expand, then, emerging cities will be an ideal place. The capital cost to be invested and the labor cost will be less in an emerging city when compared to tier 1 cities, without much compromise on other facilities.
Emerging cities are more cost friendly and significant amount of fresh talent come from tier 2 cities which is an added advantage. India is facing the entrepreneurial drive like never before and all the startups are looking for locations which are not too high on investment rates and with sufficient human labor at reasonable price.
According to Zinnov’s Location Analysis: Emerging cities of India, a report published in 2012:
Majority of the fresh talent hails from tier 2 cities.
The cost of living in emerging cities is 15-20% less when compared to tier1 cities
8 of 9 new IITs are setup in tier2 and tier 3 cities and 9 new NITs are coming up in tier 3 cities.
Challenges in emerging cities
The major challenge all the organizations face in an emerging city is the lack of international connectivity and not all emerging cities have their own international airport. Other challenges include insufficient emergency medical facilities, limited hotel/hospitality infrastructure available, very less options for recreation, lack of cultural diversity when compared to tier 1 cities and the quality of life may also vary a bit. But, these cities are still emerging and need some time to get fully established.
