Tier-2/3 cities account for 70% of formal jobs: Quess Report

During H1FY26, more than 26,000 new Universal Account Numbers were created

Bengaluru: Tier-2 and Tier-3 cities account for nearly 70 per cent of formal jobs in the country, according to the findings of the Quess Pulse Report released on Monday.

Tier-3 cities alone account for the largest share of formal jobs, followed by fast-growing Tier-2 hubs across states such as Maharashtra, Karnataka, Tamil Nadu, Uttar Pradesh, Gujarat, and Telangana.

A study of over 4.83 lakh workforce across 640 locations shows that 70 per cent of jobs are now in non-metro cities, with Tier-3 cities alone accounting for 40 per cent of employment and Tier-2 hubs a further 29 per cent compared with 31 per cent in Tier-1 cities. These opportunities are increasingly concentrated around fast-growing centres such as Coimbatore, Indore, Surat, Vadodara, Noida, and Lucknow, where expanding consumption and industrial corridors are reshaping local labour markets.

Retail, BFSI, EMPI/Manufacturing, Telecom, FMCG/FMCD, and Logistics together account for the vast majority of jobs and are also the primary engines of employment growth in Tier‑2 and Tier‑3 markets. These jobs are across roles such as store operations and sales to plant and supply‑chain, reflecting the real face of India’s growing formal workforce in Tier‑2 and Tier‑3 cities. BFSI & Manufacturing sectors contribute to over 45 per cent of Quess’ workforce from Tier-3 towns, while retail contributes 33 per cent.

The Pulse Report finds that this shift beyond metros is powered by a distinctly young and short‑tenure workforce. Across the 4.83 lakh workers studied, 64 per cent are under the age of 30 mirroring India’s broader demographic dividend.

More than half of the workforce (55 per cent) has been in their current role for less than a year, reflecting high‑mobility employment cycles driven by project‑based staffing and seasonal demand.

Commenting on the findings, Lohit Bhatia, Chief Executive Officer, Quess Corp, said, “India is seeing a clear change where formal jobs are being created. Nearly 69 per cent of payroll-linked employment is now in Tier-2 and Tier-3 cities. This reflects the decentralisation of opportunity driven by retail expansion, manufacturing corridors, and distributed service delivery, where day-to-day economic activity is taking place."

The report also records continued progress in employment formalisation. During H1 FY26, more than 26,000 new Universal Account Numbers (UANs) were created, extending access to provident fund, ESI, insurance and other statutory benefits for previously informal workers. While UANs are being generated across the country, this formalisation is occurring alongside the sharp shift in workforce deployment toward Tier‑2 and Tier‑3 locations, linking employment growth outside metros with wider access to payroll‑linked social security.

In H1 FY26, out of the 26,000 new UANs facilitated, 23 per cent consist of women, bringing workers into PF, ESI, and statutory protections. Of these, 30 per cent originated from Tamil Nadu, 27 per cent from Karnataka, followed by Andhra Pradesh and Kerala, mirroring national EPFO trends where 6.9 million net jobs were added April-July 2025, 45 per cent for youth, the report highlighted.