Urbanization and its Problems for Corporates

The world is increasingly being urbanized and this has implications for the corporate sector and the managerial class.

To start with, with more and more companies being located in urban areas, the corporate sector has to deal with the problems associated with urbanization like lack of access to basic infrastructure and facilities for its workforce. This means that the corporates would have to contend with a workforce that needs to have the basic amenities like housing, transport, access to potable water, and affordable food.

In other words, if the workforce does not have these amenities, their productivity and performance at work suffers. Therefore, it is in the interest of the corporate sector to work closely with the government to provide for these facilities to the workforce.

In addition, the things like educational facilities for the children of the employees, and access to decent and affordable healthcare are other aspects that the corporates must take into account because of the urbanized workforce that is employed in their companies. Further, corporates have to ensure that they provide for transport and other amenities to their workforce as well.

Examples from Asia

Already, the situation in many emerging markets where cities have become the de facto hubs for corporates is alarming. For instance, in many cities in China and India, the level of air and water pollution and contamination is so intense that corporates are pressing the alarm bell and exhorting the governments to do something about it.

In cities like Bangalore in India, Shanghai in China, and Bangkok in Thailand, the rapid urbanization has contributed to congestion on the roads leading to chaotic traffic and associated problems. This is again so dire and urgent that immediate action must be taken by all the stakeholders if the urban infrastructure in these cities is to be saved from total and complete collapse.

Added to these problems are the problems associated with sanitary, health, and basic services. Taken together, these problems represent a huge and gargantuan challenge for the corporates and the governments.

The situation is exacerbated by the lack of political will to solve these problems and the political gridlock and instability is only adding to the direness of the problem. This is the reason why corporates in India are now stepping out of their comfort zones and taking direct action to solve these problems with or without the help of the government.

Solutions to the Problems of Urbanization

For instance, many corporates in Asian countries are building campuses for their employees close to the place of work so that employees do not have to commute long distances, can have access to in-house medical facilities, and can reside in an environmentally friendly and pollution free atmosphere, and can access schools and recreational facilities that are provided in those campuses.

Of course, this is not the ideal solution as the solution is to improve the urban infrastructure. However, when the governments are not willing to do anything, the corporates have been forced to resort to these measures as a means of taking the matter into their own hands.

Further, many corporates in Asia are building offices along with residential units for their employees so that in a manner similar to the manufacturing companies in the earlier decades, both work and residence are within a campus or a facility that provides for all amenities.

Shifting to Tier Two and Smaller Cities

Indeed, this is a viable and workable solution as is the fact that corporates can relocate and focus on the Tier two and the Tier Three cities that are less congested. This has been the response from the governments who have exhorted the corporates to open their facilities in the satellite towns and ensure that they relocate their operations to smaller cities and towns so that the problems associated with urbanization can be solved.