With 75% of BFSI organizations reporting talent shortages, the competition for specialized skills is fiercer than ever.
At the heart of this issue lies the need for procurement experts with a unique blend of financial acumen, regulatory knowledge, and tech-savviness. But outdated hiring strategies and insular talent pools are holding the industry back.
Procurement teams in BFSI must rethink their approach to talent acquisition and retention.
Listen to this podcast to understand how procurement teams are expanding talent pools, using DEI programs and building in-house capabilities.
What You'll Hear:
- Strategies to tap into broader talent pools and develop in-house expertise
- The role of DEI programs in enhancing innovation and talent retention
- How supplier partnerships can address short-term gaps in procurement skills
PODCAST SUMMARY
The banking, financial services, and insurance (BFSI) industry is grappling with a significant talent crisis that could reshape how institutions serve customers and maintain competitive advantages. Traditionally considered stable and well-established, BFSI organizations now face challenges akin to those in other sectors: attracting, retaining, and nurturing skilled talent in a rapidly evolving landscape. This shift isn’t just an HR issue—it has far-reaching implications for operational efficiency, customer service, and innovation.
A Growing Need for Specialized Skills
The BFSI sector’s talent demands are transforming rapidly. As highlighted in a report by GEP, a leading supply chain and procurement consultancy, the role of procurement professionals has evolved far beyond basic administrative functions. Today’s procurement departments require individuals with diverse skill sets, combining expertise in financial regulations and risk management with technical savviness to navigate an increasingly digital world.
The result is a high-stakes competition for these “unicorn” professionals. Industries such as technology and manufacturing have joined the fray, offering lucrative compensation packages and workplace perks that BFSI firms often struggle to match. To compete effectively, these institutions must reimagine how they attract and retain top talent.
The Cost of Talent Shortages
The impact of talent shortages in BFSI goes beyond recruitment challenges—it directly affects financial performance and operational capacity. According to the Society for Human Resource Management, replacing a single employee costs between six to nine months of their salary. For niche and specialized roles, this figure rises significantly. Additionally, recruiting, onboarding, and training require substantial time and resources, leaving gaps in productivity.
To mitigate these challenges, some companies turn to temporary workers or contractors. However, this approach isn’t without drawbacks. Contractors often cost up to 40% more than permanent employees, adding financial strain while offering only short-term relief.
IT Procurement: A Critical Area of Concern
A particularly pressing issue is the scarcity of IT procurement specialists. As BFSI organizations accelerate their digital transformation efforts—driven by customer expectations for mobile banking, online services, and robust cybersecurity—expertise in IT procurement has become indispensable. Professionals in this domain must negotiate complex contracts for software, cloud services, and cybersecurity solutions, ensuring that institutions remain competitive and secure.
Without skilled IT procurement experts, BFSI firms risk falling behind. Poorly negotiated contracts or insufficient technological investments can impede their ability to innovate, leaving them vulnerable in a highly dynamic market. The consequences of such setbacks extend to consumers, who may experience delays in service upgrades or face heightened risks from cybersecurity vulnerabilities.
Breaking Out of Insular Hiring Practices
One key insight from GEP’s research is the need for BFSI firms to break free from insular hiring patterns. Traditionally, these companies have prioritized candidates with prior industry experience, often hiring professionals who’ve moved between similar institutions. However, this approach limits the talent pool and stifles innovation.
In contrast, fintech companies are leading by example, recruiting talent from diverse fields such as technology, data science, and engineering. By prioritizing transferable skills and fresh perspectives, fintech firms are fostering agility and adaptability—qualities essential for navigating today’s fast-paced environment.
Innovative Solutions to the Talent Crunch
While the challenges are significant, BFSI firms aren’t without options. GEP outlines several creative strategies to address the talent shortage:
- In-House Development Through Procurement Academies
Instead of competing for a shrinking pool of experienced professionals, some BFSI companies are investing in training programs to develop talent internally. These “procurement academies” focus on equipping employees with skills in fintech trends, negotiation tactics, and data analytics. Not only does this approach fill skills gaps, but it also boosts employee retention by demonstrating a commitment to their growth. - Collaborating with Specialized Suppliers
For short-term or highly specialized needs, BFSI firms can partner with suppliers that excel in niche areas such as cybersecurity procurement. This “borrowed expertise” model allows institutions to access critical skills on-demand without the lengthy hiring process. - Emphasizing Diversity, Equity, and Inclusion (DEI)
Companies with strong DEI programs are more attractive to top talent. A diverse workforce brings fresh perspectives and innovative ideas, creating better outcomes for organizations. By prioritizing inclusivity, BFSI firms can enhance their appeal and position themselves as forward-thinking employers. - Broadening the Talent Pool
By looking beyond traditional candidates and considering professionals from non-BFSI industries, firms can tap into a wealth of untapped talent. Skills such as adaptability, problem-solving, and technological acumen are often transferable and can bring new energy to traditional procurement roles.
Why It Matters for Everyone
While the talent crisis may seem like an internal industry issue, its effects ripple outward to consumers. The ability of BFSI institutions to secure top talent influences their capacity to innovate, ensure security, and deliver seamless services. A shortage of skilled professionals could lead to higher costs, slower service improvements, and vulnerabilities in critical areas like cybersecurity.
Ultimately, addressing the talent challenge is about more than filling vacant roles. It’s about transforming the BFSI sector into a dynamic, adaptive industry that can meet the demands of the digital age. From internal training programs to fresh hiring approaches and supplier partnerships, the solutions are as diverse as the challenges themselves.
For consumers, the takeaway is clear: the health of the BFSI sector impacts us all. Whether it’s accessing better mortgage options, enjoying secure online banking, or benefiting from cutting-edge financial products, we all have a stake in ensuring that these institutions thrive. As the talent landscape evolves, staying informed and asking questions about how banks and financial institutions adapt is more important than ever.
