Live Blogging - TSAM North America 2009 - Part 4
1:30pm - After a delicious lunch, I sat in on the insourcing andoutsourcing panel at the Performance Measurement & Attributionstream, which was chaired by Jeff Schwartz (in photo), Managing Director Markov Processes International.
The panel speakers included Holly Miller of Stone House Consulting, RayMurphy of BlackRock, Pat Schena of Headstrong, Gary Levy of Ivy AssetManagement, and Peter Keaveney, BNY Mellon Asset Servicing. Theyconversed for an hour about the issues and problems around outsourcingback-office technology and operations.
Takeaways from the panel included:
- When determining whether or not to outsource, the level ofcomplexity of operations is often the main issue to consider - if acompany has a large volume of work that utilizes consistent processes,outsourcing can improve efficiency and effectiveness. However, if thereare many exceptions to the process, outsourcing can complicate mattersand cause problems.
- Component outsourcing is on the rise, as it gives companies a wayto target specific weaknesses in their organizations. When companiesneed a solution to a specific problem but do not want to commit tooutsourcing full-throttle, component outsourcing is often the best wayto identify and improve weak points.
- Cost can be a benefit of outsourcing - it is a variable ratherthan fixed cost and is thus appealing during tougher economic times. Inassessing costs, the first step is to understand cost and coststructures, then to understand pricing models. Third, assess thecomplexity of asset mix. Ultimately, this will help companies come upwith a structure that suits the business model.
- Outsourcing can't fix problems automatically - if you have aproblem today and you outsource it, it's still a problem. Outsourcinggives you access to expertise and economies of scale, but problemswon't be solved on day one.