Asset managers have outsourced a lot of functions but in many cases have not gleaned the efficiencies they had hoped, says Geoff Hodge, chief executive of financial software firm Milestone Group.

“Outsourcing takes more resources than initially thought,” says Hodge. “Some fund managers thought they had outsourced 100 people but have found they have got 20 to 30 back.”

About 85 per cent of North American fund managers outsource some part of the business, he says. But many have found there has been a lack of oversight or a level of detail on their business activities that do not satisfy internal and external demands.

Many asset managers have had to devote more resources than they had originally planned to achieve an appropriate level of oversight of their outsourced business. Those who have maintained their outsourcing objectives have found they have not been able to undertake the level of oversight now required.

“Given that challenge of trying to balance costs with an appropriate level of oversight, Milestone has been able to automate oversight to allow clients to achieve the level of detail and timeliness they’re looking for at a reasonable cost,” says Hodge.

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