Don’t expect big IT parks in Tier-2 towns, says Nasscom

The hub-and-spoke model of new-age hybrid working may be a great idea, but don’t expect too many Grade-A office buildings in Tier-2 towns, said Nasscom’s senior VP and head of strategy, Sangeeta Gupta, in an exclusive interview with CNBC-TV18.

“You will have offices that are 200 to 500 people strong,” Gupta said, adding that if there is a need for Grade-A office space, it will be a Grade-A space with smaller floor sizes so that multiple companies can co-exist in one area.

"The talent pool in smaller towns is going to be limited, so you won’t have thousands of companies going into one town; you will have fewer companies going into towns where their talent is," she said.

Nasscom’s observations come after IT firms such as Sutherland have begun investing in leasing out IT office spaces in smaller Tier-2 towns like Bhopal. SaaS firms such as Zoho Corp have also followed suit, adopting a hub-and-spoke model while investing in infrastructure and talent from cities like Trichy and Madurai, while announcing plans to set up shop in Uttar Pradesh too.

While the approach has received a thumbs-up from the association as an indication of a trend for the near future, Nasscom agrees with the DLF view on the tepid demand for Grade-A real estate in Tier-2 towns.

In March, DLF’s MD of its rental business, Sriram Khattar, had told CNBC-TV18 that the company was not seeing a demand for Grade-A office space in  smaller towns. “We have not seen large, international companies adopt a hub-and-spoke workplace model in smaller towns or demand A-grade office spaces in Tier-2 towns," he had said.

“The demand for a hub-and-spoke model exists, but whether Grade-A office space is needed or not is still a question,” Gupta said. "Smaller offices will come up in these areas that can still offer a great working experience. So, no large IT parks, necessarily,” she added.

Employees' bargaining power in Indian organised job market here to stay for a few more months

Gupta said there is reason to believe half the total IT workforce could get back to the office by the year-end, but only if COVID-19 numbers stay in check. “If things stay where they are, you expect half your workforce back in the office in a hybrid format — not turning up to work every day,” Gupta said.

“Some companies are already at the 20 to 25 percent-mark of employees reporting to work, but as an industry, we are at about 15 to 20 percent of IT employees reporting to work,” she added.

She said while attrition rates at IT companies had stabilized, the headcount was still not at par with pre-COVID levels: “We expect a new normal to take form and shape in six to nine months from now as the stabilization in attrition continues.”