Harshit Chhaya, Associate Director – HR, Avail Finance
Despite India’s vast network of technologists, hiring has never been harder for fintech HRs across the country. And with the country’s startup boom, the challenges are only set to grow.
India is home to the third-largest startup ecosystem in the world and it is one of the fastest-growing fintech markets globally. The fintech boom has been particularly visible over the last few years. In fact, out of the 2100+ fintech companies that currently exist in India, over 67 percent of them have been set up in the last 5 years (Invest India). The widespread proliferation of the internet, the Government’s push towards digital services, and the rise of online e-commerce are few among the many reasons behind the meteoric rise of these companies. Fintech services have been widely adopted in the areas of consumer lending, investment advisory, B2B lending, and digital payments. While the sector will continue to have a bullish run, it is plagued by the problems posed by talent acquisition.
In the UK, a major hub for global financial services, an EY survey revealed that 42 percent of the country’s fintech companies are staring at a digital skills shortage and that hiring remains among their chief concerns. This problem isn’t limited just to the UK, India too, is no stranger to this problem. With candidates fielding multiple offers and employers outdoing their competition by offering perks previously unheard of, hiring wars are very real scenarios in the fintech industry.
The Burgeoning Demand for Tech Talent
Even before the Covid-19 pandemic, there was a clear paradigm shift in the way traditional financial institutions were operating. The move towards digitisation of services was already in motion and pandemic-led to an ultimate shift in modus operandi.
- Amid the rapid adoption of internet banking, robo advisors, AI, cloud computing, and blockchain, businesses are under continuous pressure to develop more tech-savvy systems that are better than their previous offerings. Traditional banking and financial entities can thus no longer postpone the transition to phygital/digital modes of operation and have resorted to strengthening their technological departments.
- All of this has led to companies searching for more and more technologists who can put their skills to good use in the financial sector. The demand for tech talent is so high that Tata Consultancy Services said that in the month of July itself, it had onboarded 43,000 new engineers – an unprecedented figure by even Tata’s standards.
- This acute demand has led to the talent pool of tech-savvy professionals being tapped into with increased ferocity and the industry is now facing a dearth of valuable employees. It is no longer an anomaly for candidates to have multiple offers in hand and accept the one that pays them the best.
- As companies scout for more talent from an increasingly limited pool of candidates, inflated salaries and higher dropout rates are extremely common. A statistic from economic times puts this in context: Between Oct’20-Mar’21 and Apr’21-Sep’21, there was a 28-34 percent rise in median salary for cloud security, data science, Python, cloud platform development, Java/ Net, e-commerce suite, and RPA skills. Companies are able to manage these increased hiring costs because of the consistent demand and the ability to leverage the benefits of scale.
This acute demand has led to the talent pool of tech-savvy professionals being tapped into with increased ferocity and the industry is now facing a dearth of valuable employees. It is no longer an anomaly for candidates to have multiple offers in hand and accept the one that pays them the best.
This is another facet of the talent acquisition dilemma that affects both employers and hirees. The Covid-19 pandemic has led to swift changes almost overnight and companies have had to adapt to digitisation at breakneck speed. To put this in perspective, according to a survey from Acara Solutions, in the Asia-Pacific region, 53 percent of customer interactions were considered digital in July 2020 as compared to only 32 percent in December 2019. Companies thus do not have the luxury of time and prefer an execution-ready tech team to get on board as soon as possible.
- This has meant that there is an increased focus on getting the right skill sets in through the door instead of building skills over time. Companies are also experimenting with rapid upskilling of their employees through interventions such as sandboxing, workshops, global conferences on the latest tech, online interactive courses, and in-house learning programs specific to an organisation’s needs.
- For employees, this has meant a constant need to keep up with the latest tech innovations in order to stay visible across the hiring radar. However, this isn’t the case for students at colleges and universities who are still in the nascent stages of their education.
- Now more than ever, companies are reluctant to hire college graduates and prefer industry-ready candidates. Hiring and training new talent means investing time, money, and resources with no guaranteed outcome of long-term commitments from candidates who are being constantly wooed by the next best offer.
“Now more than ever, companies are reluctant to hire college graduates and prefer industry-ready candidates. Hiring and training new talent means investing time, money, and resources with no guaranteed outcome of long-term commitments from candidates who are being constantly wooed by the next best offer.”
Current Market, Hiring Channels, and Talent Pipeline
The rapidly growing talent war has led to organisations resorting to innovative and slightly subversive hiring tactics.
- Currently, the markets are being accommodated and swallowing the bitter pill of exorbitant costs spikes to attract the right talent. According to a recent Reuters report, the shortage of technologists in India has become so dire that an unnamed Delhi start-up wooed its employees with BMW motorbikes and tickets to top sporting events. Fintech companies continue to bet on the scale to offset the cost factor of talent investment.
- In terms of hiring tactics, referrals are turning out to be the next best mode of scouting for the right kind of talent. Referrals work well for fintech companies as it ensures a talent pool of similar candidates.
- Also, in order to meet tech demands quickly without actually having to invest in hiring and training talent, more and more companies are using external tech teams on an ad hoc basis.
- Also, due to the fierce competition in the market, companies are resorting to making 3-4 offers for the same role. Fintech recruiters do this because there is a high rate of churn among the applicants’ pool until the actual date of joining.
Way Forward for Neobanks and the Fintech Space
When it comes to banking and finance in India, there have always been underserved segments of the population. However, this doesn’t mean that it has to stay this way; from a financial standpoint, secondary and tertiary population segments have opened up tremendously due to the access to economical and modern tech products and services. With the right knowledge transfer and allowing them to understand the full array of benefits, it is possible to successfully tap into this segment.
Hence, it is possible to serve these previously overlooked markets by creating the right kind of niche products with the help of the right kind of talent. However, talent acquisition and employee retention have been turned into a competitive sport of sorts with bizarre pay packages, shocking perks, and ballooning joining bonuses. It is thus a brave new world for fintech hiring.
“According to a recent Reuters report, the shortage of technologists in India has become so dire that an unnamed Delhi start-up wooed its employees with BMW motorbikes and tickets to top sporting events. Fintech companies continue to bet on the scale to offset the cost factor of talent investment.”