Global Operating Models and Outsourcing

Date:	July 2010
Author:	James Hockley

The global financial crisis of 2008 - 2009 fundamentally changed the dynamic for the investment management business:

• Operating margins for investment management firms had fallen to an all time low.
• Regulators introduced ever more onerous and wide ranging requirements.
• Much of the investor base had lost faith.

This report, published in mid 2010, observed that the mood of the industry is turning and becoming cautiously optimistic. Furthermore, firms are seeking to rationalise and simplify their current operating models to position themselves for further expansion and growth.

Within this context, the report explores the challenges that firms face in terms of growth, and provides solutions on how it should be supported by a cost-effective operating model.

This report also provides a framework to assist investment managers with the solution, design, and sourcing of their operating models.

Table of contents

	Management Summary	1
1	Introduction	3
1.1	Objectives and scope of the research	4
1.2	Methodology	5
1.3	Business context: Why were firms globalising?	6
1.4	Current context post 2008 - 2009	7
2	Global Operating Models Today	11
2.1	What is a global operating model?	11
2.2	Global operating models and variations	12
2.3	A simple model	13
2.4	Limitations and evolutions	14
2.5	Offshoring and outsourcing landscape	19
2.5	Complexity and sustainability	24
3	Complexity Factors – Deconstruct to Reconstruct	26
3.1	Factors that create complexity	27
3.2	Deconstructing complexity drivers	31
3.3	Satisfying business strategy	35
4	Reducing the Complexity – Observed Trends	36
4.1	Complexity of current operating models	37
4.2	Current trends – Investit observations	39
4.3	Trends in outsourcing	42
4.4	Offshoring and outsourcing challenges	46
4.5	Governing the model	50
5	Global Operating Models – A Recipe For Success	54
5.1	Understanding your business drivers	55
5.2	Building the model framework and parameters	58
5.3	Evaluating the sourcing options	62
5.4	Creating a sourcing and solutioning process	64
5.5	Determining ripeness for outsourcing	66
5.6	Implementing and operating the model	68
6	Conclusions	74

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