Reimagining Vendor Strategy for Talent and Resilience

Asset managers are moving quickly to operationalize and scale AI, while managing regulatory complexities and meeting rising client expectations. But one challenge consistently disrupts this progress, and too often goes unnoticed: operational fragmentation.

Many firms now manage multiple third-party vendors, often across various geographies, each with its own systems, data, and risk profile. This complexity slows execution, clouds accountability, and magnifies exposure. In a recent incident, a mid-sized asset manager traced a costly cyber breach to a seldom-used vendor supporting niche analytics, a prime example of the risks fragmentation creates.

The Vendor Fragmentation Challenge

The average financial institution manages over 30 vendors, yet most staff their vendor risk functions as an afterthought with bare-minimum employees. The problem extends beyond risk: vendor sprawl consumes management attention, inflates costs, and erodes agility.

The talent dimension deepens the strain. According to KPMG’s 2024 CEO Outlook, 71% of asset-management leaders cite talent shortages as their top growth constraint, even as 89% plan workforce expansion. Demand for AI and analytics is outpacing supply. The result: firms face a dual crisis of complexity without capacity.

From Vendor Consolidation to Integrated Operating Models

Leading firms are responding with strategic vendor consolidation, not merely to cut cost, but to enhance control, data transparency, and speed. Research shows 10–20% support-cost savings, but the bigger prize lies in integration. When vendor ecosystems are streamlined and aligned with workforce planning, firms unlock new potential: access to specialized skills, faster time-to-market, and stronger governance.

The evolution of Global Capability Centers (GCCs) illustrates this shift. Once cost-saving vehicles, GCCs have now evolved into innovation engines, with substantial investments in AI and advanced analytics to co-create value with their parent organizations. India has emerged as one of the preferred GCC destinations for global companies, hosting more than 1,700 GCCs, including over 50 in banking and financial services, and employing 180,000+ professionals.

The Shift Toward Strategic Vendor Partnerships

The future of vendor strategy isn’t about managing suppliers, it’s about architecting partnerships. As automation absorbs routine work, human talent must focus on exception handling, strategic analysis, and innovation. Progressive firms now view vendors as extensions of their talent and capability base, not just contractual providers.

This partnership model delivers more than resilience: it drives innovation capacity, compresses cycle times, and strengthens competitive positioning. It enables leaders to convert operational efficiency into strategic agility.

• Partner to Innovate: Treat vendors as co-creators of value, not cost centers.
• Simplify to Amplify: Rationalize vendor portfolios for focus and control.
• Integrate to Accelerate: Align vendor and workforce strategies.

Why Vendor Strategy Is Now a Leadership Priority

Vendor management is no longer a back-office concern, it is a boardroom capability. The firms that win will be the ones that adopt this lens.

In a landscape defined by volatility, talent gaps, and accelerating AI adoption, vendor strategy must evolve from a procurement function to a core operating capability. Asset managers that redesign their vendor ecosystems today will gain the resilience, innovation bandwidth, and talent leverage needed to outperform over the next decade.