Fund managers switch outsourcing priorities

Fund managers see IT development, customer service, investment management and custody as the biggest growth areas for outsourcing in the next 12 months, William M. Mercer’s 2000 Outsourcing Survey has found.

Fund managers see IT development, customer service, investment management and custody as the biggest growth areas for outsourcing in the next 12 months, William M. Mercer’s 2000 Outsourcing Survey has found.

Currently, 89 per cent of fund managers surveyed outsource custody, 44 per cent administration and 41 per cent unit pricing.

Mercer Fund Manager Advisory Services principal Peter Worcester says these results highlight a shift in thinking as fund managers have traditionally considered investment management and customer service as core competencies.

However, he sees product development and customer services remaining as in-house activities.

“The industry is undergoing significant change, with the Internet and globalisation, and these changes are leading fund managers to consider outsourcing those parts of the business where they no longer hold a competitive advantage,” Worcester says.

“The results suggest that a quarter of all fund managers surveyed are reviewing the pros and cons of outsourcing unit pricing and administration/unit registry, while about a third are reviewing their IT development and support.”

The survey found that about 60 per cent of fund managers would evaluate outsourcing of at least one functional area within the next 12 months.