Outsourcing back- and middle-office functions increased shareholder value by more than 10% at European asset managers, according to a study funded by Bank of New York.
The study analyzed share prices of 21 European fund managers after they announced outsourcing deals and found that share prices generally rose on expectation of improved manager performance. The increases were seen regardless of the type or size of the outsourcing deal.
The managers analyzed have combined assets under management of $2.1 trillion.
The study found that direct cost reduction was not the main driver of value in outsourcing deals, but rather the manager's interest in focusing on core investment functions.