Beyond Metro Limits: The Hidden Advantages of Building Offshore Teams in Tier 2 and 3 Cities
Offshore teams have become a cornerstone strategy for accounting firms in this rapidly evolving landscape of global business. It is the finest strategy to optimize costs and access diverse talent pools. However, the conventional wisdom of focusing solely on Tier 1 cities or metros for offshore operations is being challenged. This blog explores why accounting firms should consider expanding their horizons to Tier 2, 3, and 4 cities or smaller towns when building their offshore teams. We'll delve into the myriad benefits this approach offers both to employees and the firms themselves, ultimately creating a more sustainable and efficient offshore model.
Benefits for Staff
1. Lower Cost of Living: One of the most significant advantages for employees in smaller cities is the substantially lower cost of living compared to metropolitan areas. This financial benefit translates into:
Employees in these areas can enjoy a comfortable lifestyle without the financial pressures often associated with big-city living. This increased financial freedom often leads to higher job satisfaction and loyalty.
2. Better Work-Life Balance: The pace of life in smaller towns and cities tends to be less frantic than in metros, offering employees:
This balanced lifestyle can significantly contribute to employee happiness and productivity, creating a win-win situation for both the staff and the firm.
3. Less Commute Time and Work Flexibility: One of the most striking differences between metro and non-metro locations is the commute time. In smaller towns:
While the option for hybrid working remains attractive, allowing staff to work from home a few days a week if needed, the shorter commutes make regular office attendance more feasible and appealing. This setup fosters a productive physical working environment while still offering flexibility.
4. Proximity to Family: Many professionals in smaller towns value the opportunity to stay close to their families. This proximity:
The ability to maintain strong family ties while pursuing a career can be a significant draw for talented professionals.
5. Opportunities for Growth in Smaller Markets: Contrary to popular belief, smaller cities can offer robust growth opportunities:
These growth prospects can be particularly appealing to ambitious professionals looking to fast-track their careers.
6. Higher Disposable Income: The combination of competitive salaries and lower living costs results in:
This financial advantage can be a powerful motivator and retention tool for firms.
7. Improved Quality of Living and Happier Team: The cumulative effect of these benefits leads to:
Higher job satisfaction and team cohesion
A happier, more satisfied team is likely to be more productive, loyal, and motivated, benefiting the overall performance and culture of the organization.
Benefits for the Firm
1. Debunking the Myth of Unavailable Experienced Talent: Contrary to common perception, smaller cities and towns are increasingly becoming hubs of skilled professionals. People are choosing to return to their hometowns or smaller cities for the finest quality of life. All chose the peaceful lifestyle there. Firms can tap into this pool of talent that combines expertise with a strong work ethic and loyalty.
2. More Grateful Team: Employees in smaller towns often show higher levels of appreciation for good job opportunities. This gratitude translates into:
3. Long-Term Cost Efficiency: While offering competitive salaries, firms can benefit from:
This cost efficiency allows firms to reinvest in their business or pass savings on to clients, enhancing competitiveness.
4. Lesser Commute Time and Reduced WFH Demands: The shorter commute times in smaller cities bring several advantages:
This setup allows firms to maintain a productive office environment while still offering the flexibility that modern employees value.
5. Geographical Diversity: Spreading the workforce across various locations offers strategic benefits:
This diversification strategy can provide a competitive edge and operational resilience.
6. Improved Retention Rates: Employees in smaller towns are often more stable in their career choices:
These improved retention rates can significantly reduce recruitment and training costs while maintaining operational continuity.
7. Tailored Compensation and Flexibility: Geodiversity allows firms to create more nuanced compensation strategies:
This flexibility in compensation can help attract and retain top talent while managing overall costs effectively.
8. Reduced "Bandwagon Effect": In smaller cities, there's often less of a "bandwagon effect" when it comes to job-hopping or following industry trends:
This stability can lead to a more focused and committed workforce, reducing the disruptions and costs associated with high turnover.
Cost Comparison Managing a 50-Member Team
| Particulars | Category | Ranking - Cost of Living | Preschool (or Kindergarten) Fees | Primary School Fees | Meal In Inexpensive Restauran | Meal for 2 People, Mid-range Restaurant, Three-course | Internet |
|---|---|---|---|---|---|---|---|
Mumbai | Metro | 1 | 8,695.40 | 230,235.29 | 400 | 1900 | 710.37 |
Delhi | Metro | 2 | 7,848.84 | 164,862.07 | 350 | 1,900.00 | 726.49 |
Gurugram | Metro | 3 | 13,968.75 | 342,222.22 | 500 | 2,000.00 | 836.27 |
Bengaluru | Metro | 4 | 10,006.94 | 290,421.05 | 300 | 2000 | 969.98 |
Noida | Metro | 5 | 8,666.67 | 125,000.00 | 300 | 1,500.00 | 755.86 |
Pune | Metro | 6 | 8,140.80 | 144,516.13 | 500 | 2,000.00 | 797.09 |
Chennai | Metro | 7 | 6,908.33 | 118,516.13 | 150 | 900 | 832.47 |
Hyderabad | Metro | 8 | 8,224.14 | 213,382.35 | 300 | 1,300.00 | 737.18 |
Kolkata | Metro | 9 | 4,304.30 | 147,538.46 | 250 | 1,300.00 | 616.53 |
Ahmedabad | Metro | 10 | 5893.06 | 152,500.00 | 250 | 1200 | 602.46 |
Chandigarh | Non-Metro | 11 | 5,250.00 | 240,000.00 | 325 | 1,200.00 | 690.55 |
Kochi | Non-Metro | 12 | 8,083.33 | 212,500.00 | 150 | 800 | 572.17 |
Jaipur | Non-Metro | 13 | 7,000.00 | 99,666.67 | 250 | 925 | 755.38 |
Thane | Non-Metro | 14 | 7,444.44 | 127,500.00 | 275 | 1,500.00 | 656.25 |
Guwahati | Non-Metro | 15 | 3,333.33 | 200,000.00 | 130 | 900 | 466.67 |
Surat | Non-Metro | 16 | 4,656.25 | 127,500.00 | 275 | 800 | 545.36 |
Lucknow | Non-Metro | 17 | 5,500.00 | 149,600.00 | 200 | 1,000.00 | 533.9 |
Ghaziabad | Non-Metro | 18 | 7,500.00 | 123,333.33 | 200 | 1,500.00 | 576.4 |
Faridabad | Non-Metro | 19 | 8,666.67 | 125,000.00 | 300 | 1,500.00 | 700 |
Ludhiana | Non-Metro | 20 | 6,666.67 | 123,333.33 | 300 | 600 | 589.83 |
Indore | Non-Metro | 21 | 3,583.33 | 110,833.33 | 250 | 900 | 791.67 |
Nagpur | Non-Metro | 22 | 5,500.00 | 140,000.00 | 275 | 1,000.00 | 646.5 |
Vadodara | Non-Metro | 23 | 5,361.06 | 168,333.33 | 175 | 1,200.00 | 545.67 |
Patna | Non-Metro | 24 | 4,300.00 | 160,000.00 | 225 | 800 | 677.56 |
Bhopal | Non-Metro | 25 | 4,250.00 | 266,666.67 | 200 | 1,000.00 | 684.4 |
Coimbatore | Non-Metro | 26 | 5,203.96 | 135,000.00 | 100 | 850 | 776.88 |
Vishakhapatnam | Non-Metro | 27 | 6,666.67 | 166,666.67 | 200 | 1,000.00 | 628 |
Raipur | Non-Metro | 28 | 6,041.67 | 108,333.33 | 250 | 900 | 540 |
Bhubaneswar | Non-Metro | 29 | 6,740.68 | 102,000.00 | 187.5 | 1,000.00 | 831.87 |
Ranchi | Non-Metro | 30 | 2,500.00 | 100,000.00 | 275 | 600 | 762.5 |
Jodhpur | Non-Metro | 31 | 3,083.33 | 99,666.67 | 205 | 700 | 582.67 |
Varanasi | Non-Metro | 32 | 5,500.00 | 80,000.00 | 200 | 750 | 475 |
Udaipur | Non-Metro | 33 | 5,000.00 | 152,500.00 | 250 | 1,200.00 | 602.46 |
Nashik | Non-Metro | 34 | 1,666.67 | 71,099.00 | 250 | 750 | 749.75 |
Amritsar | Non-Metro | 35 | 2,000.00 | 50,000.00 | 140 | 700 | 674.75 |
Jamshedpur | Non-Metro | 36 | 3,000.00 | 147,538.46 | 225 | 900 | 616.53 |
Madurai | Non-Metro | 37 | 2,083.33 | 150,000.00 | 175 | 1,000.00 | 547 |
Gwalior | Non-Metro | 38 | 3,125.00 | 73,333.33 | 175 | 1,000.00 | 590 |
Kanpur | Non-Metro | 39 | 3,125.00 | 130,000.00 | 180 | 1,000.00 | 533.9 |
Mangalore | Non-Metro | 40 | 4,920.00 | 62,520.00 | 100 | 1,500.00 | 764.86 |
Vijayawada | Non-Metro | 41 | 6,166.67 | 150,000.00 | 200 | 1,000.00 | 702.88 |
Agra | Non-Metro | 42 | 3,500.00 | 99,666.67 | 200 | 925 | 755.38 |
Meerut | Non-Metro | 43 | 3,000.00 | 120,000.00 | 200 | 800 | 546.33 |
Aurangabad | Non-Metro | 44 | 5,916.67 | 122,500.00 | 250 | 650 | 766.67 |
Allahabad | Non-Metro | 45 | 2,500.00 | 149,600.00 | 200 | 1,000.00 | 533.9 |
Tiruchirappalli | Non-Metro | 46 | 3,725.00 | 118,516.13 | 135 | 700 | 669.8 |
Hubli-Dharwad | Non-Metro | 47 | 5,000.00 | 75,000.00 | 400 | 977.87 | 965 |
Mysuru | Non-Metro | 48 | 1,916.67 | 150,000.00 | 100 | 600 | 559.6 |
Rajkot | Non-Metro | 49 | 5,361.06 | 158,833.33 | 175 | 1,050.00 | 545.67 |
Warangal | Non-Metro | 50 | 6,166.67 | 150,000.00 | 200 | 650 | 600 |
Final Thoughts
While Metro or Tier 1 cities have been the topmost choice for firms to build their offshore teams, building teams beyond these is now the new trend. Without any doubt, it offers a wealth of advantages for firms and employees as well. From improved work-life balance and higher disposable income for staff to long-term cost efficiencies and improved retention rates for firms, this approach presents a compelling alternative to the traditional metro-centric offshore model.
Talking of the talent pools in Tier 1 and 2 cities, firms can find diverse, stable, and cost-effective offshore teams. This strategy not only addresses the immediate needs of cost optimization and talent acquisition but also contributes to the broader goal of sustainable and responsible business growth.
As the business landscape is continuously evolving globally, forward-thinking accounting firms are opting for a diversified approach to building their offshore team. They'll be well-positioned to navigate the challenges of the future while fostering a happy, productive, and loyal workforce.
In the end, the decision to look beyond Tier 1 cities for offshore teams isn't just about cost savings—it's about creating a more resilient, diverse, and effective global operation that benefits both the firm and its employees. As we move forward in an increasingly interconnected world, this approach may well become the new standard for successful offshore operations in the accounting industry.
Shawn Parikh is the CEO and Co-Founder of MYCPE ONE. A Chartered Accountant by qualification, he has over 15 years of experience of being a problem solver for small to mid-size firms and over time he has given consultation to thousands of CPAs, accountants and tax pros. Shawn has always been a big believer and advocate of social enterprises and small accounting firms & businesses. He consults and speaks on several topics ranging from Building Remote Team - Remote Working, Offshore Staffing, strategic planning, Scalability of Accounting Practice, cloud accounting, practice management, LinkedIn marketing, etc.
Shawn Parikh
