Outsourcing and the Buy Side—Coming Around Again

Outsourcing certain business functions to specialist providers is not a new phenomenon across the capital markets. But times are changing.

The buy side is not an easy place to be right now. Active managers are under mounting fee and performance pressure from passive managers. They are also under increasing scrutiny from the investor community demanding solid returns in what has fast become a bear market, while at the same time investors expect their money managers to show that they have adopted the industry’s best practices—and especially the technologies underpinning those practices—all the while attempting to cap their fixed operating costs. Needless to say, it’s a pretty tall order.

At the time of compiling this whitepaper, it was clear that the Covid 19 pandemic would have a significant bearing on the capital markets—although exactly how it would shape the industry and what the buy side might look like in practice once lockdowns are lifted remain unclear. However, just a few months ago, the prospect of market-makers and brokers working from home was unthinkable. And yet here we are, with seemingly the entire industry working remotely in one way or another, with employers, investors, regulators and indeed employees having to make the best of a bad situation.