Managers outsource research to India

Following the lead of investment banks, money managers are turning to India to hire research analysts at a cheaper price.
Analysts in India are handling research duties such as data collection, company research, valuation analysis, the construction of financial models and even the development of insights on individual companies.
Because the individual research analysts are cheaper to hire in India, outsourcing often translates to having bigger research teams that can delve deeper into their work.
“They can get a lot more granular in their analysis,” said Niket Patankar, chief executive of Adventity Inc., a New York-based business that matches U.S. financial services firms with analysts in India. “With investment managers, [outsourcing] is more about getting more people to help develop more ideas that are winners.”
Just a year ago, Mr. Patankar provided outsourced research to 10 hedge funds, mutual funds and other asset management firms. That number has jumped to more than 30.
Dushyant Shahrawat, a research director at The Tower Group Inc. in Needham, Mass., is drafting a report about financial services firms’ outsourcing research to India. His preliminary estimates indicate that 20% of U.S. institutional money managers have part of their research conducted offshore.
“By 2010, I would expect 70% of institutional money managers to have something in the offshore market,” Mr. Shahrawat said.