MF operations staff in demand

Third party vendors poaching on fund houses’ employees

It was the fund managers who gave the hirers sleepless nights in mutual fund industry with their high flying ways. Now, their counterparts from the operations side are turning job hoppers.

The demand for these accounting professionals who keep the books of the asset management companies is not coming from AMCs, per se. It’s the third party vendors, who are in poaching mode.

“Today a lot of attrition is happening in the operations side. We are not losing people to AMCs. But we are losing them to these outsourcing players in the past 6-7 months,” says Syed Shahabuddin, managing director and chief executive officer, SBI Funds Management. Employees are also seeing a better career opportunity in these providers as they give greater exposure and growth opportunities.

Says Vijai Mantri, CEO, Deutsche Asset Management, which has outsourced its operations to JP Morgan, “An AMC cannot offer the kind of platform, say a JP Morgan would be able to offer these professionals.

They get to handle multiple accounts and the width of their profile also gets enhanced considerably. Their retention power is also far more superior to the AMCs.”

Apart from JP Morgan, global biggies like Citibank, HSBC, Deutsche and Standard Chartered are all in the game.

These financial powerhouses, which had earlier set up captive BPOs to service their overseas businesses, have ramped up their hiring as they are increasingly looking at the potentially huge onshore business.

With a number of new players lined up to start MF business, they have a ready market.

Though the older players who have already a system and staff in place may take some time to open up to outsourcing, the newer players are lapping it up readily.

Says Mark Van Den Broek, COO, Bharti AXA Investment managers, which is in the process of getting approvals from Sebi.

“We are looking at the European model, where in post the deal execution practically everything gets done outside. The entire middle office is outsourced there,” he adds.
Till now, only custodian service was outsourced by the mutual funds.

But the new fund houses which are coming in are outsourcing other routine work like day-to-day net asset value calculations and fund accounting.

Says Arindam Ghosh, CEO, Mirae Asset AMC, which has outsourced its fund accounting to Deutsche, “We feel the function is best left to the vendors, who are specialists. It makes sense for us to hire them rather than to do it in-house. It’s cost-effective too.”

“It makes sense as there is lot of saving in terms of staff costs and system costs,” agrees Van den Broek of Bharti Axa.

While staff needed for operations could be reduced by 60%, you virtually do away with the need to have an operating system in-house, he says.

But what is cost effective for the new kids on the block is proving to be a headache for the older fund houses as they are losing staff.

While some fund houses are mulling to go the outsourcing way, many are sticking to in house models.

However, Shahabuddin says his fund house is not looking at outsourcing as yet. “What options do I have. Either I also outsource or I build enough bench strength. Right now, we have chosen to do the latter.

We will continue to do our fund accounting. From the governance point of view, we feel this is more suitable for us,” he says.