Salary Hikes: Small Towns Are Now Beating Metros Like Bengaluru, Mumbai in Pay Raises!

The salary gap between India's big metros and smaller cities is shrinking, says a new TeamLease report. Thanks to a boom in manufacturing and industry, Tier-2 cities like Ahmedabad are now offering better pay hikes than even Bengaluru and Mumbai. The IT sector, however, still leads the pack in overall salary growth.

Bengaluru: The pay gap between India's big metro cities and its smaller towns is closing fast. A new report from recruitment firm TeamLease suggests that in the coming days, these smaller cities will actually see better salary hikes than their metro counterparts.

According to TeamLease's 'Jobs and Salary Primer Report for FY 2026-27', India's Tier-2 cities are quickly becoming major job hubs. And it's not just because of the IT sector anymore. They are booming thanks to manufacturing, industrial growth, and big investments.

Which Cities Are Leading in Salary Hikes?

This year, Chennai is expected to see the highest salary hike among all major metro cities. Here's a quick look at the numbers:

Chennai is at the top with a 9.7% salary hike. Pune and Hyderabad follow close behind, rounding out the top three. Bengaluru, India's tech capital, is in fourth place with a 9.4% salary increase. Mumbai and Delhi are tied for fifth, both expecting a 9.3% hike.

Tier-2 Cities Are Catching Up, and How!

You can't ignore the rise of non-metro cities in India's economic landscape. Ahmedabad is set for a 9.5% salary hike, which means it has beaten major economic hubs like Bengaluru, Mumbai, and Delhi. Jaipur is not far behind with a 9.3% increase, while Visakhapatnam (Vizag) and Nagpur are also showing excellent salary growth.

The TeamLease report explains why this is happening. "The growth in manufacturing, development of industrial corridors, and steady investments are helping smaller cities compete directly with metros on salaries," the report states. "They are becoming a strong bridge between India's old economic hubs and the new-age job market."

IT Sector Still Rules in High Salaries

While average salary hikes are one thing, the major tech hubs in the IT sector continue to dominate when it comes to the actual salary figures. Thanks to global companies and constant demand for tech talent, these cities have seen the highest salary growth:

• Bengaluru: 12.7%
• Hyderabad: 11.7%
• Chennai: 11.5%
• Pune: 11.5%

The Salary Gap Between Permanent and Contract Jobs

The report also sheds light on the difference in pay between permanent and temporary (or contract) employees across various sectors.

Sectors with the Smallest Pay Gap:

In the Travel & Hospitality sector, the pay difference between permanent and temporary staff is just 4.2%, the lowest in the country. The Power & Energy sector (4.3%) and the Fintech sector (4.8%) are next on the list.

Sectors with the Biggest Pay Gap:

On the other hand, the Manufacturing, Engineering, and Infrastructure sector has a huge pay gap of 11.4% between permanent and temporary employees. The Insurance sector has a 9.9% gap, and the Banking sector has a 9.8% difference, as revealed in the report.