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22 March 2022

Roundtable Debate: the Why, When, What, and How of Managed Services

Why should investment managers consider technology and operations outsourcing or co-sourcing? When in a firm’s lifecycle should it be looking at outsourcing? And how does one get organizational buy-in for moving to a managed services model?

SS&C Advent recently moderated the roundtable on the topic of “Developing a Managed Operational Services Model.” The panel was comprised of investment, operations, and asset servicing practitioners to address the various forms of outsourcing, and many other questions. The entire conversation is captured and available in this report. For firms on the fence about outsourcing, facing an expensive upgrade, or just running up against the constraints of their legacy systems, it is an enlightening read.


Why managed services?

The panel generally agreed that asset managers should focus primarily on their core business and rely on an outsourcing provider to bring in expertise and decrease time to market for new products. As one COO summed up, “If you don’t outsource, it can be very difficult to keep up with new technologies and regulatory changes.” Participants also cited the expense and disruption of frequent upgrades. Firms today outsource to gain scale and agility that they could not otherwise achieve through their internal infrastructure, which enables them to accelerate the launch into a new product area or geographic market.


When to evaluate managed services?

Evaluation of the outsourcing option is not a one-time event or closed discussion, but should be on the table throughout a firm’s lifecycle. The panel agreed that it is not for everyone at all times. For some firms, it simply goes against the prevailing culture. However, if it does not make sense now, firms should be open to reevaluating as new products or operational challenges arise. New regulations that add complexity and risk may be a trigger as well, as firms must decide whether they have the requisite expertise to handle the change or should reach outside for it. 

Liability can be a concern, with one participant noting, “you can outsource the work, but not the responsibility.” Both parties need to be clear about what is in the contract and service level agreement (SLA).


How to evaluate a provider

How does one evaluate a particular provider and its offering? It’s important to know what kind of experience other clients have had, how quickly the provider is able to integrate data and transition the client, and how they keep up with changes in technology and regulation. Service providers and customers agreed that references are essential, which is a motivator to provide excellent service.

When it comes to organizational buy-in, it has to start with top-down sponsorship by management. However, it is also important that everyone who may be affected by the change is able to contribute, so not only are the expected benefits understood, but also the likely outcomes.

The roundtable touched on a wide range of other issues, including shared views on how the market for outsourcing is evolving and what it is likely to look like over the next five to ten years. For a variety of perspectives on how to manage an outsourcing relationship based on firsthand experience, download the full report package. Also included in the roundtable report is our white paper titled, “Five Key Questions: What to Look for in a Managed Services Provider.”