SEI, the US-headquartered investment and technology consulting firm, has issued a white paper setting out how to do outsourcing the right way to get best results.
There are plenty of studies saying that wealth and asset management firms must outsource middle- and back-office functions to focus on their core roles. But some moves to farm out functions can go awry. SEI, the US-headquartered investment and technology consulting firm, has issued a white paper setting out how to do outsourcing the right way to get best results.
In its paper, Reinventing Buy-Side Infrastructure, SEI describes how outsourcing, especially with regard to middle- and back-office solutions, can create streamlined processes and operational efficiencies. The study is based on one-on-one interviews with executives of investment management firms.
The report’s topics includes buy-side technology initiatives, business and budget drivers, and changing attitudes towards the choice firms face of buying services or building these themselves.
“While assets under management, investor demands, and regulatory requirements are all still growing, overarching uncertainty has discouraged firms from similarly expanding their resource allocations,” Jim Warren, head of solutions for SEI’s Investment Manager Services division, said.
“The resulting budgetary immobility has shifted the pressure onto technology initiatives to deliver far more efficiently in order to achieve growth. It’s become clear that the current environment supports the trend toward outsourcing back- and middle-office functions to create that efficiency. It’s no longer a decision of ‘buy versus build’ for investment managers, it’s become ‘partner or perish’,” he said.
The executives who were interviewed for this paper also identified reporting and data management as the top technology initiatives, and believed that having clean and consistent data throughout the pre- and post-trade life cycle will offer advantages over their peers.
Despite an array of available service provider solutions to choose from, many executives struggle with the trade-offs between longstanding or emerging technology, best-of-breed or integrated solutions, and which providers will prove to be the best long-term partners, the report said.
“Selecting the right service provider can be a drawn-out experience, and it’s important to choose a provider that clearly adds value, one you consider a true partner,” said Ross Ellis, Vice President, Knowledge Partnership for SEI’s Investment Manager Services division. “Ultimately, the goal is to establish a long-term relationship with a provider that understands your firm, is easy to work and grow with, offers good value, and has a good industry reputation. While not a one-size-fits-all business proposition, outsourcing is clearly the direction this industry is trending.”
The paper was published by the SEI Knowledge Partnership.