Tier-2 and Tier-3 Cities Now Account for Nearly 70% of India’s Formal Jobs: Quess Report

India’s organized job market is rapidly shifting beyond metro hubs, with Tier-2 and Tier-3 cities now accounting for nearly 70% of formal employment, according to the latest Quess Corp Pulse Report. The findings highlight a structural change in where jobs are being created across the country.

According to the report, Tier-3 cities make up the biggest portion of the employment at approximately 40%, Tier-2 cities make up 29%, and Tier-1 metros make up about 31% of the organized workforce. This shows that the total number of workers hired by cities is much greater in smaller cities than in the largest metropolitan areas in India.

The workforce data used in the analysis covers more than 4.83 lakh employees working in more than 640 locations in India and gives a general perspective of the changing trends of employment patterns.

Emerging Employment Hubs

There are emerging non-metro cities that are becoming key employment hubs. Among major destinations where employment is flourishing, there are Coimbatore, Indore, Surat, Vadodara, Noida, and Lucknow.

The rising consumption markets, industrial corridors, and more business investment beyond conventional metro clusters are benefiting these cities.

Sectors Driving Job Creation

Employment growth in these cities is being driven primarily by sectors such as:

Retail
Banking, Financial Services and Insurance (BFSI)
Manufacturing and engineering
Logistics
Telecom and FMCG operations

In Tier-3 towns specifically, BFSI and manufacturing together account for over 45% of employment, while retail contributes to around 33% of jobs.

Young Workforce Dominating New Roles

The data also brings out the character of the labor force in these new job markets.

Workers are young, with 64% of workers being below the age of 30, which indicates high involvement of early-career professionals.
Over 50% of workers have worked less than one year in the same position, and this indicates that there is high mobility of the workforce as people are serving shorter tenures of work, especially in operational and frontline positions.

Formalization of Employment Continues

The report also suggests that there has been further growth in the formalization of jobs. Over 26,000 new Universal Account Numbers (UANs), which allow workers to access benefits like provident funds, insurance, and social security, were created in the first half of FY26. Women also registered 23% of these new registrations with gradual but consistent involvement in the organized workforce.

Tamil Nadu (30%) and Karnataka (27%) recorded the greatest number of new formal workforce registrations, followed by Andhra Pradesh and Kerala.

A Structural Shift in India’s Job Market

The results indicate that employment opportunities are being decentralized, and firms are moving to hire in Tier-2 and Tier-3 markets to obtain new sources of talent, minimize operating expenses, and promote distributed operations.

With the growth of retail networks, manufacturing clusters, and service delivery models throughout the country, non-metro cities in India are becoming the primary engine of formal job creation.

Sources