How do mass slum resettlement programmes in expanding megacities contribute to the reproduction of urban poverty? Chennai's premier resettlement colony, Kannagi Nagar, housing slum-dwellers evicted from the city since 2000 has integrated itself into the industrial, commercial and software economies of the information technology corridor on unfavourable terms, swelling the supply of unskilled casual workers for local firms. This article highlights, from the vantage point of workers in the resettlement colony, how the restructuring processes of large formal sector companies within the "new economy" exploit conditions created by the state's slum clearance policies, to enhance the precariousness of work for residents of resettlement sites. It highlights issues of quality of work for casual workers in the formal sector and their role in the production, persistence and reproduction of working poverty. It thereby illustrates how the restructuring of urban space by new imperatives of urban capital, through the peripheralisation of both industrial establishments and working classes, creates new socio-spatial configurations of work and poverty.