Synopsis: Bengaluru, the Silicon Valley, is experiencing one of the highest rising costs, infrastructure pressure, and the expansion of the talent pool across the country are encouraging IT companies to expand into other cities. Also, many Tier-2 cities are now attracting technology investments due to lower operational costs and supportive state policies.
As per reports, a total of 629 companies have shifted their registered office from Karnataka to other states in the last five years. This doesn’t mean that every company is abandoning the city completely. Instead some entities don’t fully abandon Bengaluru but are adopting a hub-and-spoke model. This means that the main headquarters remains in the city and some additional development centres are established in other regions.
One of the major reasons behind this move is the rise in office rentals and infrastructure pressure in Bengaluru. As companies expand their workforce and expansion comes with need of more space. The increase rates of rentals isn’t helping thus companies are increasingly exploring alternative cities that can offer space and talent at lower costs. With that said, several cities across India are emerging as strong alternatives for IT expansion.
1. Hyderabad
Hyderabad has become one of the most preferred cities for IT companies in India. Many global technology companies have built large campuses in the city over the past decade. Many of the companies are attracted to this particular city due to infrastructure such as HITEC City, government support for the technology sector, and lower real estate and operational costs compared with Bengaluru.
Hyderabad’s IT exports crossed ₹2.41 lakh crore in FY2024, according toTimes of India data, this highlighted the speed of expansion of its technology sector. The availability of large IT parks and planned infrastructure has also helped companies establish large engineering campuses that may be difficult to develop in Bengaluru’s already crowded IT corridors.
2. Pune
Pune has also taken up the pace in being one of the growing cities transitioning into a major IT hub. Many of the IT services companies have expanded their delivery centres in the city in recent years. The city attracts companies because of its lower real estate costs compared with Bengaluru.
The city now hosts more than 300 Global Capability Centres (GCCs), making it one of India’s fastest-growing technology and engineering hubs. Pune’s strong educational ecosystem, including numerous engineering institutes, also provides companies with a steady pipeline of skilled graduates every year.
3. Chennai
Chennai has already been one of India’s major IT hubs and continues to to be one of the top to attract technology investments. Many large companies operate some of their biggest delivery centres here. Zoho Corporation has also expanded its engineering teams in the region.
The city offers a mature IT corridor with multiple technology parks and a steady supply of talent. Tamil Nadu’s IT exports according to The HIndu have crossed ₹2 lakh crore in recent years, with Chennai contributing a major share of this growth.
4. Coimbatore
Coimbatore has steadily seen growth over the years and finally made it as an emerging Tier-2 IT destination. Many of the companies have already set up development centres in the city.
One of the major advantages for companies is lower employee attrition rates compared with large metropolitan cities. Some Industry estimates suggest attrition in Tier-2 cities can be 20–30% lower and it can help companies reduce hiring and training costs. The lower lifestyle cost paired with available talents make Coimbatore a good choice.
Also read: Cost of Living in 5 Indian Cities: Are Metro Cities Getting Costlier in 2026?
5. Kochi
Kochi is seeing the growth of the city very rapidly and the development is being supported by technology parks like Infopark and others. The Infopark in Kochi alone hosts over 500 companies employing more than 70,000 professionals. It shows the growing scale of the region’s IT sector. The city also benefits from Kerala’s high literacy rate and skilled workforce along with lower living costs compared with larger metro cities.
6. Visakhapatnam
Visakhapatnam is attracting major companies as the state government actively promotes the city as a technology hub and offers incentives to IT firms. The government of Andhra Pradesh has introduced policies aimed at building Visakhapatnam into a major technology destination on India’s eastern coast. Lower office rentals and improving infrastructure are encouraging companies to consider the city for future technology campuses and development centres.
7. Ahmedabad
Ahmedabad is also seen consistently chosen by the top companies. The reason mainly being the lower operational costs, improving infrastructure, and government policies focused on attracting Global Capability Centres (GCC) have made the city an alternative to traditional IT hubs. The Gujarat government has introduced several investment policies and IT park developments to attract global technology companies to cities such as Ahmedabad.
Why IT Companies are Leaving Bengaluru
- Increasing Operational Costs: The commercial real estate and living expenses in Bengaluru have increased significantly. This makes the expansion of companies more expensive.
- Commute: The heavy traffic congestion and longer commute have become major concerns for companies as well as employees.
- Government incentives: Many state governments now offer tax benefits, subsidies, and dedicated IT parks to attract and support companies.
- Distributed operating models: Companies are increasingly adopting the hub-and-spoke model to operate across multiple cities rather than concentrating operations in a single location.
Conclusion
The needs of IT sector companies are gradually increasing and they are looking for greater cost efficiency and access to new talent pools. The emerging cities such as Hyderabad and Pune are already hosting major technology operations and other cities like Kochi, Coimbatore, Visakhapatnam and Ahmedabad are building their own technology hub spots.
As companies continue to adopt distributed work models and search for cost efficiencies, India’s technology sector may increasingly evolve into a multi-city network of IT hubs rather than relying on a single dominant centre.
Written by Kenbi Riba
