Wall Street & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Asset Management

12:48 PM
Connect Directly

Is Co-Sourcing The New Outsourcing for Asset Managers?

Co-sourcing could be a model that both large funds and start-ups consider as they grapple with uncertain economic conditions.

Forget about outsourcing. The way of the future is co-sourcing, at least according to Apollo Global Management, an alternative investment manager with $86 billion in assets under management.

The New-York based firm has just announced a partnership with Gravitas, who will provide it with operations, technology and risk compliance services.

While co-sourcing is a practice that has been around for some time often as a service performed to supplement a firm’s existing internal audit department, it is a novel approach for an asset manager, and according to Gravitas it is a model that an increasing number of funds are likely to adopt.

Apollo’s co-sourcing model will ensure that Gravitas employees are in the same building as Apollo’s employees. Staff will be sourced, hired and managed by Gravitas while Apollo’s subject matter experts will provide the product specific training and expertise needed to support Apollo’s funds.

The Gravitas co-sourcing service, which is a long-term project unlike a typical in-out consulting assignment, should serve to provide more control and transparency to a client than traditional outsourcing, and will give Apollo the scalability and control they require with 25%-33% in cost savings, says Gravitas CEO Jayesh Punater.

“It started with asking ourselves, how do we create scale without adding headcount? We started with risk management and created a pilot project that spread across different business units,” Punater explains.

Co-sourcing is a model that large funds as well as start-ups are likely to adopt as they grapple with uncertain economic conditions to produce alpha, according to Punater.

The reason behind co-sourcing’s likely rising popularity is that large funds like Apollo face a scale issue as well as a rationalization of cost issue and regulatory pressures. “They face doing more with less. The burden of running a firm like that is very heavy,” he says.

In addition to large firms, start-ups and small firms can also draw benefits from co-sourcing, Punater points out. “Many smaller firms have to give detailed reporting and risk exposure. To hire a full-time risk person is very expensive.”

Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio

Register for Wall Street & Technology Newsletters
Top Quotes of the Week
Top Quotes of the Week
It wasn't all bad luck for the capital markets this week: Hedge funds had a decent first quarter despite a slowdown in jobs numbers, BlackRock might be heading into new territory as hedge fund managers take a hard look at their counterparties, and the head of the IMF didn't pull any punches when assessing today's global economy. At least we can admire the nice weather and some of the best quotes of the week.