Technology companies looking at Tier-II and Tier-III markets with full focus

Be it televisions, laptops, cameras, washing machines or air conditioners, technology companies are launching entry-level products aimed at consumers in these markets. These companies are researching on the consumers needs of these specific markets.

As part of Panasonic's strategy to increase its reach in Tier II and III markets, the electronics maker has recently launched an air conditioner and television range with superior speaker quality.

Since rural people love to turn up the volume, Panasonic has designed the products accordingly. Industry experts say Tier II and III cities have been quick in adopting the technological advancements, making them the centre of focus for all the technology bigwigs.

Google has developed applications such as search in local languages, speech recognition in Indian accent, Google Translate and Google Transliteration to meet the local requirements. Google also has flagged off an "internet bus" to educate and lure more people in Tier II and III cities and rural areas into the Web culture.

Tier II and III geographies are getting extremely crucial. Mid-market customers have been underserved traditionally, and yet they represent the fastest growing segment and Dell's greatest opportunity for growth and profitability today

Banks have to look at Tier II and Tier III cities also - Coimbatore, Ludhiana, Madurai, Lucknow, Kozhikode, Bhopal and Nashik

These many days Banks and other majors have only looked at the metros and other main cities in India for their customer care and all other centers. But, now they will have to look at the tier II and tier III cities as well.

Banks (especially private ones) would have to pay more attention to the high demand for money in tier II and tier III cities in India.

Crisil says that despite the difference in volumes, higher profit margins can make smaller towns as attractive as metro cities.

The report covered 15 tier II cities that included Coimbatore, Ludhiana, Madurai, Lucknow, Bhopal, Nagpur, Nasik, Rajkot among others. These make up for 15 percent of the total retail loan demand in India.

In some of these cities growth prospects are so strong that the car loan demand might grow at 20 percent for the next couple of years against an expected Indian average of 13 percent.

Gold loans are expected to grow at 50 percent rate, mainly driven by smaller towns.

Even HDFC Bank, which disbursed Rs 15,000 crore worth new retail loans in the first quarter this year, saw 50 percent of loans coming from tier II and III locations.

Yes bank, which intends to take its retail portfolio to 10 percent by the year end from the current 1 percent, will also open most branches in tier I and Tier II cities.

Difference between tier-I, tier-II and tier-III

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Metros are basically regarded as Tier I cities, relatively smaller cities are regarded as Tier II cities whereas smaller cities are considered as Tier III ones. Here is the explanation why they are considered so:-

As Indian economy experiences the boom in all sectors triggered by its economic and investment policies, the metros or the Tier I cities are the ones that are inundated with burgeoning investments in the industrial and the services sector. Along with large-scale investments has boomed the realty sector creating congestion, arising out of an increasing demand for residential and commercial properties. This congestion in realty structures has forced the respective governments and many investment companies to seek out for alternative smaller cities leading to a demand for Tier II and III cities.

One of the basic reasons for investments flocking in to the smaller cities is available properties and affordable prices. Moreover, the special initiatives taken by the respective governments in providing the smaller cities with infrastructural facilities and creation of SEZs, has played a vital role in promoting these small towns into cities of the future. Keeping in view all the congenial factors necessary for setting up corporate infrastructure, the investing companies ranging from pharmaceuticals to financial institutions, automobiles to the IT & ITES sectors; to the retail and real estate sector are opting for the smaller cities transforming them into India's fastest growing cities in a matter of few years.

The large scale investments by the corporate sector in the smaller cities apart from initializing economic prosperity and job opportunities has also created demand for realty spaces. While developers from all the nearby areas flock in to cater to the real estate demands, the property markets in these smaller cities are witnessing along with a changing skyline, an unprecedented hike in real estate prices. While the realty trend in Tier I cities have reached a saturation point, with the yield gap witnessing significant margin of 9.5 to 10 per cent, the Tier II cities record a yield of 10.5 to 11.5 per cent. However, the emerging winners in the present real estate scenario of India are the Tier III cities, which offer greater yields of up to 12 percent. This rising prices and promising future of these cities are driving investors to buy properties predicting long-term gain in years to come.

Recent trend also shows that due to lack of availability of business equipped infrastructure and exorbitant property prices in the existing metros, the IT, ITES and the BPO companies are vying for the smaller cities where they are promised better infrastructure, state-of-the-art office spaces and also skilled manpower. A careful study of these Tier III cities reveals the close proximity of these cities, to the most happening cities of India like Delhi, Mumbai, Bangalore to name a few. Thereby, it will be no mistake if they are called the extension cities of the booming metros. Of late, the tier II cities like Pune, Kolkata and Hyderabad have made business opportunities and infrastructural development like never before. Now it is the turn of the Tier III cities or the smaller cities like Jaipur, Ghaziabad, Kochi, etc. to make it big into the realty business as the government and the corporate sector target them as 'India's Next Destination Cities'.

sourcing from p a v a n @ w i k i a n s w e r s

CII Madurai Zone welcomes and suggest TN Government for Tier-II cities

CII Confederation of Indian Industry Madurai Zone Chairman R. Dinesh says -

Further development of Madurai-Tuticorin corridor,focus on Madurai tuticorin airports,and linking madurai tuticorin and Madurai Tirunelveli corridors would support the industry.

Dinesh requested the government to frame a new IT policy in such a way that it helped IT companies look at investments in Tier II and Tier III cities.

CII Madurai welcomes government initiatives to develop southern Tamil Nadu.

Chennai, Coimbatore, Dindigul and Madurai: Tier-1, Tier-2, Tier-3 and Tier-4 Cities of tamil nadu

Please refer to the map above for the districts/cities we refer to.

Government has divided the districts into four different categories, based on the level of existing development, infrastructure and the level of infrastructure and development needed in the years to come.

As years go by, if the cities progress, the city moves to upper tiers.
The four tiers are Tier-1, Tier-2, Tier-3 and Tier-4 cities.

For example, Tier-1 constitutes Chennai. Tier-2 constitutes Coimbatore, Madurai, Trichy etc., Tier-4 constitutes Dindigul.

Coimbatore is a strategic development centre for Cognizant like software companies, similar to the ones we have in Chennai, Kolkata, Pune, Bangalore, Hyderabad and Mumbai. Cognizant is committed to grow the centre, leveraging the rich talent pool of technical professionals in the region.

Coimbatore will soon emerge as a Tier-1 city for IT in one year, based on the growth we are seeing.

It is not only Coimbatore that is on the Tier-2 city map of Tamil Nadu, but also Trichy, Madurai, Salem, Hosur and Tirunelveli.

Other than Coimbatore, Tamil Nadu is trying to develop Tier-2 cities spreading across the entire state; from Chennai at the northern end to Tirunelveli at the southern tip. Sekar Ponniah of Global Software Solutions (TVL) Pvt Ltd started a 100 % Export Oriented Unit located at Tirunelveli in the year 2000.

While we look at the map above, Dindigul, which is a Tier-4 cities, is strategically located between Coimbatore, Karur and Madurai.

Coimbatore, which is currently a Tier-2 might move up to Tier-1 city soon. Madurai, which is Tier-2 city is also improving. Karur is a very well industrialized export unit. Now, Dindigul present in between Madurai, Karur and Coimbatore has lot of advantages in future.

Note down, in your diary - Dindigul will become big someday, considering its georgraphic location.