An outsourcing move that illustrates a shift toward hybrid structures

The announced transfer of 140 employees from BIL to Kyndryl is not an isolated incident. It is part of a broader trend observed in several European financial institutions facing increasing cost pressures, operational automation, and the streamlining of support functions.

“An environment marked by rapid technological transformations,” “modernization of the bank’s technological foundations,” “a long-term commitment to greater resilience”… The arguments are familiar, as is the rhetoric. The move at BIL, which is expected to result in the transfer of 140 employees to Kyndryl—the bank’s partner since 2013—next September, is still subject to regulatory approval.

“Partnering with Kyndryl allows us to modernize at the required pace, while remaining focused on our core mission: serving our clients and supporting the Luxembourg economy,” comments Jeffrey Dentzer, Chief Executive Officer, BIL.

For Petra Goude, President for Strategic Markets at Kyndryl, the transformation goes far beyond technology. “It’s about rethinking how we operate, building trust, and accelerating decision-making at the dawn of a new era of agent-based AI, to help create a more agile, resilient, and modern banking platform for Luxembourg.”

Cloud and Agent-Based AI

Under this framework, as presented by the two companies, Kyndryl will now act as “an integrated and accountable partner, supporting key elements of BIL’s technological modernization journey.” ” This partnership will also reinforce BIL’s ambitions in the field of AI, complementing initiatives already underway within Luxembourg’s innovation ecosystem, particularly in collaboration with academic institutions and regulatory authorities.

In parallel with its technological transformation, BIL continues to enhance the customer experience through digital innovation. In 2025, the Bank accelerated its digital transformation with the ambition of offering a unique end-to-end banking experience.

BIL has expanded its direct-access services through digital onboarding, electronic signatures, and online subscription to savings products, simplifying customer interactions and improving operational efficiency. It has also launched “Berry,” Luxembourg’s first AI-based virtual banking assistant, offering customers faster and more intuitive support directly through its BILnet platform. Going forward, Kyndryl will support BIL in adopting the cloud and agent-based AI to further differentiate the customer experience.

A Cycle That Has Reached Maturity

Luxembourg’s financial sector is struggling. This is largely due to its salaries—the highest in Europe—and the broader context: AI, DORA, the democratization of the cloud… There is talk of a “stagnation” in the IT job market, particularly noticeable in mid-level roles. For over a decade, Luxembourg has benefited from exceptional conditions: strong growth in finance, accelerated digitalization, a chronic skills shortage, and a proliferation of regulatory initiatives. Companies were hiring en masse, and IT professionals could move quickly from one organization to another.

This cycle now appears to be reaching maturity. Major financial institutions are now seeking greater flexibility. The goal is no longer simply to hire staff, but to optimize operating costs while maintaining the capacity for innovation. Outsourcing is thus becoming a strategic lever rather than merely a tool for budget cuts.

Toward Hybrid Structures

This trend is further driven by technological advancements themselves. The industrialization of the cloud, the widespread adoption of SaaS platforms, and rapid progress in AI are profoundly changing human resource needs. Certain tasks historically performed locally can now be automated or centralized.

This transfer of the BIL to Kyndryl is therefore not an isolated incident. According to the “Sourcing Strategies Survey” published by PwC Luxembourg, 90% of players in the Luxembourg financial sector now outsource part of their operations. The trend affects IT infrastructure as well as application support, cybersecurity, and certain software development functions.

Furthermore, compliance with DORA, cybersecurity requirements, ESG constraints, and cloud modernization all demand massive investments. In this context, the traditional model of large in-house IT teams is becoming harder to sustain. Banks now favor hybrid structures, combining a strategic internal core with resources outsourced to service providers or nearshore service centers.

“Saturated Market”

However, this trend masks a growing fragmentation of the market. Highly specialized profiles in cybersecurity, cloud architecture, AI, or data governance remain rare and in high demand. Conversely, more generalist roles—such as support, standardized development, application maintenance, or testing—are under significant pressure due to automation and offshoring. On specialized forums and professional communities, the polarization is palpable.

Several Reddit discussions focused on the Luxembourg market explicitly mention hiring freezes, layoffs, and the outsourcing of operations. Some professionals speak of a “saturated market,” while others describe salaries under pressure or hiring now focused on more junior and less expensive profiles. It is clear today: financial institutions are no longer seeking merely to reduce costs, but to transform themselves through technology partnerships.