How cities like Coimbatore, Indore, and Salem are reshaping India's economic hierarchy

This article is authored by Suchita Dutta, executive director, Indian Staffing Federation (ISF).

For a generation of young Indians, a formal job once meant a one-way ticket to a metro. That map is now being redrawn — and organised flexi-staffing is holding the pen. India's formal contract workforce has quietly become one of the country's most powerful engines of decentralisation, carrying recognised employment, social security and steady incomes into towns the formal economy had long overlooked.

E-commerce (Representational Image/Pixabay)

The scale is no longer marginal. According to ISF's Indian Flexi-Staffing Industry 2025 study, the formal flexi workforce reached roughly 7.2 million in FY25 — about 1.3% of India's total workforce — placing the country third globally in flexi-workforce size. This is not a fringe of the labour market; it is fast becoming its formalising core. What makes this growth transformative is where it is landing. Five states — Maharashtra, Karnataka, Uttar Pradesh, Tamil Nadu and Telangana — still anchor roughly 55% of the flexi workforce, but the real momentum has moved to the cities beyond their capitals. In another report, the first half of FY26 found that 69% of payroll-linked employment now sits in Tier-2 and Tier-3 cities. Tier-3 towns alone account for 40% of that workforce and Tier-2 hubs another 29%, leaving the metros with just 31%. Coimbatore, Indore, Surat, Vadodara, Noida and Lucknow have joined Mysuru, Salem, Hosur, Bhopal and Kanpur as genuine employment hubs, not merely feeder towns.

Several forces are converging to push jobs outward. E-commerce and quick-commerce, the fastest-growing users of flexi talent at close to 20% annual growth over five years, are building fulfilment and last-mile networks deep into smaller markets. Logistics, BFSI and manufacturing are following the same map, aided by production-linked incentives and the supply-chain formalisation that GST 2.0 is accelerating. Even technology hiring is decentralising, as Global Capability Centres extend AI, cloud and data roles beyond the metros. The pattern is sharpest at seasonal peaks: this festive cycle, staffing demand in Tier-2 and Tier-3 cities rose 21–25% year-on-year, comfortably outpacing the 14% growth seen in the metros.

Crucially, flexi-staffing does not merely move jobs — it formalises them. A worker onboarded through a formal staffing company receives a written contract, provident fund, insurance and statutory benefits the informal economy rarely offers. This is decentralisation with dignity: social security reaching a warehouse associate in Salem or a retail executive in Bhopal on the same terms as a counterpart in Mumbai. The national data mirrors the shift. The EPFO recorded 6.9 million net payroll additions between April and July 2025, with 45% coming from young workers — a signal that formal employment is broadening and deepening at once.

The human dividend is significant. Around 71% of those seeking formal staffing are under 30, and women now make up 26% of the formal flexi workforce. With nearly 60% of India's graduates emerging from smaller towns, flexi-staffing lets that talent build formal careers without abandoning home — easing metro congestion, retaining spending power locally and reversing decades of one-directional migration. As India's gig and freelance workforce heads towards an estimated 23.5 million by 2030, distributed, formalised flexi employment offers the surest bridge from informal work to genuine social security.

This is what equitable growth looks like in practice: Opportunity spread across the map rather than stacked in a handful of cities. To sustain it, policy must keep pace — rationalising the GST burden on manpower services and providing clear employer-of-record clarity under the new Labour Codes so that formalisation reaches even further, even faster.

India's next wave of job creation will not be written in its metros alone. It is already being authored in its districts and small cities — and flexi-staffing is proving the most reliable route from informal livelihoods to formal, secure and dignified work.

(The views expressed are personal)

This article is authored by Suchita Dutta, executive director, Indian Staffing Federation (ISF).