By Claire McGreal
Australian investment managers who outsource their investment operations have only 8% less staff than those who manage their operations internally, according to new research by Investit.
The SimCorp sponsored Future of Investment Operations report found that despite outsourcing their investment operations, investment managers are retaining higher staff numbers to manage the modified system requirements their providers cant deliver.
“The report has shown that while 75% of fund managers choose to outsource their investment operations to allow them to focus on their current core business, the majority retain additional internal staff to implement customised system requirements, check data and manage outsourced processes,” said managing director for SimCorp Asia, Peter Hill.
“The report’s results indicate concern by some investment managers who outsource, particularly those running complex investment strategies and multi-jurisdictional businesses, that the size and cost of the retained operation has grown too large,” said Investit Principal, Doug Neill.
“Duplication often occurs when checking and validating data provided by outsourcers. However, there is a fine line between this process, and duplication.”
The report noted that investment managers are expecting to experience a change in service from their outsource providers.
“We predict there will be a need for investment operations providers to leverage off global systems, resulting in market change,” said Neill.
According to the report, 69 % of investment managers believe outsourcers will very likely need to leverage global capabilities in the future, while 73 % felt that it was very likely that outsourcers would need to increase their efficiency locally.
“The report indicates a need for Australian investment managers to stop thinking about the short term and adopt a longer term approach to investment management systems,” said Hill.
More than 40 Australian investment mangers, service providers and software vendors were interviewed for the report.
Source: Financial Standard Australia