- Create a global optionset "MH Cities" to hold certain city names - Pune, Mumbai, Thane, Nagpur and Panvel.
- Create a boolean field "Outside Maharashtra" in contact entity and place it on the contact form.
- Develop a custom workflow to retrieve all contacts in the system and check if City field has a value equal to the one present in global optionset. If the value is one of those present in global optionset then set the flag "Outside Maharashtra" to yes else no.
For example there are 2 Contacts in the CRM, Arun has city Kolkata and Asmi has city Pune then Arun's flag should be set to - Yes and Asmi's - No.
Suggestion - you can develop your logic first in console application C# for easy debugging and then convert this to a custom workflow.