One-third of investment management firms will increase their use of outsourcing over the next two years.
Due to regulatory and investor demand, firms that offer alternative investments will have to look outside of their companies for help with back-office functions, according to a PricewaterhouseCoopers survey. Sure enough, 40% said that their primary reason for expanding outsourcing is to turn their company’s focus on core competencies. An additional 31% said that they outsource to bolster finance teams that don’t have the time or resources to handle their work. Another third said they outsource to cut costs.
Sixty-two percent of the finance executives polled plan to keep their outsourcing arrangements as they are, the survey found.
Outsourcing was also No. 1 on PricewaterhouseCoopers’s list of the top 10 issues facing the investment management industry. Performance pressure for individual actively managed mutual funds and alternative investments came in second, while the potential retirement windfall for mutual funds — thanks to the Pension Protection Act and easier 401(k) enrollment — was third.