Implementing a Successful Compliance Outsourcing Program
The use of “outsourcing”, to help the Compliance function accomplish more while keeping costs under control, is a relatively new phenomenon. While many other functions in asset management firms began outsourcing much earlier (back-office: 1990s; investment research 2000s), the Compliance function is playing catch-up.
In the past three years, several large sell-side and buy-side firms have begun using legal and para-legal staff out of India in increasing volumes. As with research, investment banks have led the way, but a few large asset management firms have followed suit too. Most of them started off by ‘offshoring’ work to their captive centers in India and other locations. The emergence of capital markets specialist vendors, who also now provide Compliance outsourcing services, has helped to build confidence in this space.
The combined pressure of rising regulations and budgetary restrictions will drive asset management businesses to increasingly resort to outsourcing more middle office functions. Compliance managers need to learn how to successfully run outsourcing programs. Merely replicating an onshore approach in an offshore location neither works well nor delivers optimal results.
In this paper, we provide some practical guidelines on how to make a Compliance outsourcing program a success. The first section focuses on the business case for outsourcing and the second section focuses on how you can evaluate and execute a good outsourcing program.
Priti Parekh, COO and Global Head of Delivery, Amba Research