Global accounting firms are setting up shops in smaller Indian cities as demand is growing

Major accounting firms are increasing their investments in new locations outside of major cities in India as demand for more affordable back-office operations has been increasing and smaller communities are advancing along the economic value chain.

For decades, large multinational corporations (MNCs) have rushed to India’s biggest metropolises, mainly, Mumbai, Delhi, and Bengaluru, to set up massive operational centres that employ millions, lured by vast, low-cost talent pools, particularly in information technology (IT).

Business service exports have grown to be a crucial component of India's economy.

According to a report by Ernst & Young, multinationals will set up “global capability centres” for all types of industries in tier-2 cities such as Jaipur, Vadodara, Kochi, and Chandigarh. The number of such centres could expand to 2,400 by 2030 from 1,600, adding 2.6 million jobs and over US$ 100 billion to the economy.

India has become a global powerhouse for corporate services including taxes, data analytics, cybersecurity, and customer management due to rising salaries, a decline in accounting graduates in Western nations following the epidemic, and visa limitations. 

According to World Trade Organization (WTO) estimates, India is one of the top exporters of services in the world, with a part of the global services trade that has increased from 2% in 2005 to over 4%.

Global giants are finding it easier and more competitive to shift work to small locations in India, says the Chief Growth Officer, Deloitte South Asia.

With more than 100,000 employees in India, Deloitte wants to increase its personnel by 50,000 over the next three years and grow into new cities, while KPMG expects to add more than 20,000 employees during that time.

According to the India Chief People Officer, PwC, Ms. Padmaja Alaganandan, the company hired close to 12,500 individuals in the fiscal year that ended in March and anticipates doing the same this year. All of that could help the employment market considering the slowing hiring in the manufacturing and IT sectors brought on by fears about global growth.

A service exports target of US$ 400 billion has been set by Prime Minister Mr. Narendra Modi for the current fiscal year, about 25% more than the previous year.

The President, Services Export Promotion Council, Mr. Sunil Talati total services exports could overtake goods exports in the next five years to US$ 750 billion.

Deloitte, PwC, and IBM have opened offices in Bhubaneswar, the capital of the eastern state of Odisha, to service Indian and international clients.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.