Posts tagged 'outsourcing'
Since the New Year, I have spoken to dozens of asset managers about a variety of issues related to the management and potential growth of their business. I have never seen such a divergence of views regarding the issue of spending to build their businesses. It seems that we have gone from an environment where many firms were concerned about their survival to a period where some are continuing to cut budgets, while others are aggressively growing, and everything in between.
I continue to believe that we are in the proverbial “new normal” environment which will be characterized by a prolonged period of sluggish growth, tighter profit margins, and more competition as compared to the environment that preceded the financial crisis. Many managers will never replenish their staffs entirely, while some will strategically position themselves for growth through focused investment capabilities and thoughtful dynamic marketing. Outsourcing alternatives will continue to grow in variety and quality as managers are reluctant to commit to the fixed costs of hired staff. Execution will need to be efficient and effective in order to minimize waste. The winners will separate themselves from the pack through best in class capabilities and management across the board and up and down the line.
As this story unfolds, there will undoubtedly be additional surprises. Stay tuned!
February 26th, 2010
As 2010 gets underway, broad trends toward outsourcing of a variety of services and functions continue. For the foreseeable future, we will be in an era where efficiency and tight execution predominates. Those firms that constantly examine their cost structure and optimize value per dollar spent have the best chance of being winners.
We have written before about the opportunity to outsource various marketing support functions to gain efficiency. There are variable cost solutions in the marketplace for marketing communications, RFP production, and data base management that offer low cost high quality services.
Another example of this trend applied more broadly is exhibited in the insurance asset management marketplace. Insurers are outsourcing asset management in ever greater numbers. It seems they have concluded that their core competency is in insuring risk rather than manages investments. A number of asset managers have noticed this trend, and alertly have started to explore their opportunities in this space. Of course, managing assets for insurers requires specialized capabilities so it behooves them to carefully analyze their potential positioning in the insurance segment before jumping in with both feet.
Overall, firms should continue to look for ways to streamline their operations and narrow their focus. Outsourced resources provide interesting solutions to certain functional areas. Look for this trend to gather momentum in the months to come.
January 18th, 2010
Everything seems to be picking up lately. Markets, bonuses, manager hirings. Even deal activity in the industry is picking up (ie BGI, Van Kampen, TCW??) Does all of this represent harbingers of robust recovery, or another version of irrational exuberance?
My view is that we are still moving toward a “new normal” characterized by a steady state of narrower profit margins, lower fees and compensation, and generally tougher business conditions. It is amazing how a few short months after crawling away from the cliff, many are feeling really good again about business prospects. I believe we have had a dramatic snap back from the abyss that will run out of steam soon. Hope for a repeat of boom times does not produce them. We still have not flushed out all of the excesses created in the past decades. I don’t believe we will revisit the conditions of a year ago, but what we are currently seeing is just way too far too fast.
Investment managers must continue to prepare for the new normal. They need to be thoughtful and strategic about their businesses. They must focus on crisp execution. They must manage their costs carefully, including examining outsourcing options, and aggressively target growth opportunities.
October 20th, 2009
As investment firms react to the new post-crisis environment, one of the issues they will need to address is what they should outsource. I have no doubt that outsourcing will continue to increase in the industry as firms will be reluctant to staff up with full time help to the degree they have in the past, as managers will be cautious to increase their fixed costs.
In the sales area, the outsourced solution is third party marketing. These businesses should continue to serve small managers and alternatives firms, but whether their use with larger traditional firms becomes more popular is unclear.
I see the largest potential increase in outsourcing in the marketing area. There are now quality resources available on an outsourced basis in RFP production, data base population, all forms of writing and communications, presentation design, website design, and various other elements of the marketing process. Managers should consider these variable cost solutions to their marketing needs carefully before restaffing with full time employees.
September 7th, 2009
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