Consortia Buying, Asset Management, BPO, Joe Vales

Consortia buying will drive how asset management companies procure BPO services

17 Jan 2005 | (News)

Asset management firms are in fierce competition to attract institutional and retail customer accounts, but they may soon be cooperating with one another to form buying consortia, according to a new study by Vales Consulting Group and Tinervin Advisors. The white paper, the second in a three-part series, was recently published in Europe by CxO Research and distributed to the subscribers of the Outsourcing Project: “Achieving Competitive Advantage through Collaborative Partnerships”.

“Our first white paper on consortia buying was published in the summer of 2004 and identified the consortia buying trends shaping the global BPO marketplace,” said Joseph Vales, Senior Partner of the Vales Consulting Group and co-founder of the Reference Standards Board. “Our follow-up research, conducted during the fourth quarter of 2004, uncovered intense interest in consortia buying in the financial services vertical market, with asset management firms leading the way. We predict that a new wave of consortia buying will soon take place in the asset management sector, where competitors team up to leverage their combined purchasing power and negotiate long-term outsourcing contracts that further reduce their operating costs by 30-40 percent.”

Tony Johal, publisher of the Outsourcing Project, said, “The white paper by Vales Consulting Group and Tinervin Advisors should be required reading for asset management executives seeking to take advantage of all the benefits that outsourcing offers. Vales and Tinervin combine their deep domain expertise in asset management and business process outsourcing to provide insights that asset managers will find particularly instructive in building or improving their outsourcing programs and initiatives.”

In “Asset Management: The Coming Wave of Consortia Buying,” the authors discuss the evolution of consortia buying in financial services and examine five major corporate outsourcing programs that illustrate the various ways that buyers and suppliers in financial services are collaborating in North America, Europe and Australia. The report analyzes consortia buying trends in six different segments of the asset management industry and identifies five developments driving consortia buying in the industry over the next five years.

“Asset management firms can no longer assume that the investment markets will return to the ‘roaring’ 1990’s,” said Richard Tinervin, founder and Managing Partner, Tinervin Advisors. “Given the increased regulatory compliance and reporting requirements, plus the growing expectations and demands of investors, it is clear that the costs related to the manufacture, distribution, and servicing of assets will become too great a burden for those firms that lack the scale, operational band-width, processing efficiencies and deep pockets to fund new infrastructures and technologies. Participating in buying consortia to leverage the power of outsourcing will become the only viable option for many of these firms.”

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