Outsourcing could save 16% on manager staff – research

Investit, a management consultant, has said new research points to a 16% staffing cost saving if management firms outsourced their operations, technology and support functions.

These costs are otherwise rising within investment management firms because their business is becoming more complex – driven by new asset types, new investment strategies, global expansion plans and operational risk – ongoing regulatory refirm, and client demands.

And the costs are rising just at a time when profitability is being squeezed overall, Investit said.

“Considering approximately 65% of a manager’s costs are staff costs and more than 50% of a manager’s headcount supports operations, it is unsurprising that managers are attracted by these services offered by custodians or specialist vendors in order to stem a future rise as complexity and regulation increases the burden,” Investit said.

Its research found that of the top 400 manager globally, just 23% by AUM outsource investment operations, but Investit said this is likely to grow in coming years because managers need to focus more on their core business, while outsourcing processing areas that are becoming commoditised.

Investit’s full report can be read here: http://www.investit.com/intelligence-report-the-changing-shape-of-outsourcing/


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