Bangalore: After struggling to find affordable office space in Mumbai, India’s financial hub, Sarabdeep Singh decided to move his startup company more than 1,500km north to Mohali, a town with a population of 176,000 in the state of Punjab.
Singh, co-founder of Bodhik, a financial technology company, had been operating from shared office space, which proved inadequate when his team expanded. An office for eight to 10 employees in Mohali costs about 15,000 rupees ($231) to 20,000 rupees a month, including utilities, compared with more than 50,000 rupees excluding utilities in Mumbai, he said.
New Delhi, the information technology hub of Bangalore, and Mumbai collectively host the largest share of both startups and investors, but entrepreneurs such as Singh are increasingly choosing smaller cities to kick-start new ventures.
“The cost of hiring a software developer is at least 40% lower in Mohali compared to Mumbai,” he said. “A fresher [new employee] costs us about 15,000 to 20,000 rupees per month. In Mumbai, it’s very difficult to find someone at this salary because of the high cost of living, and competition.”
Singh said that his personal expenses have also fallen since Bodhik relocated to Mohali, in part because he now spends just five minutes commuting to his office compared with a two-hour journey in Mumbai. Working out of a small town is preferable so long as companies’ required skill sets are not too specialized, he said.
Tarun Singh Uppal, co-founder of Vnaya, a provider of online tutorials and parenting support that launched in Mohali in 2012, agreed. “The infrastructure cost and living cost is about 30-40% cheaper than that of the national capital region [New Delhi] or any big city. It wasn’t possible for us to start in a tier-1 city,” he said.
In addition to lower costs, startups have found new markets in smaller cities and towns because of relatively light local competition.
Vishwas Shringi, CEO and co-founder of Voylla, a jewelry retailer, launched in 2012 in Bangalore, population 11 million, but moved its headquarters to Jaipur, a hub for skilled artisans with about 3.5 million people, two years later. The startup, with more than 1,000 employees, has an online store and more than 200 retail locations across India.
“The infrastructure here is geared towards crafts and textiles,” Shringi said, adding that it made sense to relocate to Jaipur because his company wanted to put design and production under the same roof.