Marketing challenges apart, 300 firms sprout in past 5 years in Tier-2, -3 cities. Even as the Indian IT services industry has not been able to make much inroads into the tier-2 and tier-3 cities, many software product development companies incorporated in recent years are banking on smaller cities to minimise operational costs. By operating out of smaller cities, most of these software product start-ups — led mostly by first-generation entrepreneurs — want to minimise their cost of operation during initial days. This helps them significantly, as the gestation period for product companies are considerably higher when compared with the IT services companies. Besides, these companies manage to attract good talents in these towns at a comparatively lower price, according to industry analysts.
Source: Business Standard