V Kamakoti, Director, Indian Institute of Technology (IIT), Madras, said large IT firms and manufacturing industries must open more centers in Tier 2 and 3 cities to create more job opportunities, tap-in the rural talentforce and to benefit from a stable manpower.

“At a time when IT companies are worried about high attrition rates, they can look at recruiting from smaller towns, which offers stable manpower with very less attrition and people with a lot of intelligence,” Kamakoti said, adding, “There is also consumers and market in smaller towns, so it is better to put more factories there. The 5G technology is only going to give many other prospects in terms of better connectivity, so companies need to capitalise all that.”

He was speaking at a panel discussion at the  Madras Management Association (MMA’s) annual convention for the year 2022. The theme of the event was ‘Betting on the future - How India can make this decade its own’. The hybrid event was powered by The Hindu BusinessLine.

Kamakoti said, with better connectivity, low cost of living a yet better quality of life, many people are preferring to work from their native towns in Tier 2&3 cities. 

K Ananth Krishnan, CTO, Tata Consultancy Services, said the pandemic accelerated digital consumption, which will drive change across multiple industries. He added that even the unglamorous, yet necessary, backend operations like production and supply chain changed dramatically in recent times. 

“At the start of the pandemic, our Covid-19 test kits manufacturing was zero. Today, we are not just self-sufficient but in a position to even export. It was possible not because of large companies but a lot of small companies, who dissected the value chain of what goes into a test kit,” Krishnan, said, adding, “and there is a very efficient data marketplace which has sprung up and connected demand and supply to all of these guys and that’s a case study in itself.”

In his presentation, Shivanshu Gupta, Senior Partner, McKinsey & Company, said, a fundamental shift in the supply chain, great value migration towards digital native businesses, and a major shift in consumer preferences are the three major global trends that will affect the way companies operate.

He added that up to $4.6 billion of annual trade flows could shift locations or countries over the next 5 years. “In the auto sector, for instance, of the $1.7 trillion trade flows that happen globally, we expect anywhere between $261-300 billion of trade flows to shift.”

Highlighting that auto OEMs are thinking to by-pass Tier-1 semiconductor suppliers making microcontrollers or proprietary devices, Gupta said, “This is a massive shift and it will continue to grow and will have a lot of implications for all of us including getting demand shifting out of other countries and coming to India as well in the next 10 years.” 

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