According to the C-Suite Asset Manager Survey from Brown Brothers Harriman (BBH), 30% of asset managers are more likely to outsource than a year ago.
Outsourcing has been a growing trend in recent years as firms seek to replace fixed costs and legacy infrastructure with access to specialist providers who can deliver expertise and scalable technology. Only 9% said they are less likely to outsource this year than a year ago.
As firms consider how to finance and execute these projects in a constrained environment, many respondents said they are placing a greater focus on modular implementations, starting with one or two functions and adding more over time. BBH said its observing an increase in large ($500 billion) managers outsourcing trade management, reconciliations, and post-trade data integration as they look to access more durable and scalable infrastructure, and free up internal resources.
Data integration and management is key to this story and was the top area managers would consider to outsource (57%), followed by middle office (38%). Based on conversations, BBH believes data and middle office outsourcing is in some ways symbiotic: asset managers will continue to outsource middle office technology/services and invest in solutions such as IBOR that can provide high quality, timely, reconciled, and aggregated data that can be used across their enterprise from investment decisions through to risk, compliance, performance measurement and client reporting.
Eliminating the inefficiencies caused by reinputting, reconciling, and aggregating data residing across multiple systems remains the holy grail for asset managers.