Morgan Stanley, State Street in $300B Ops Deal

From the 12/1/09 article titled "Morgan Stanley, State Street in $300B Ops Deal" that appeared on fundfire.com.

"There's been a tremendous amount of implementation activity around outsourcing arrangements," says Ben Keeler, a director with Citisoft. While investment managers spent the first half of 2009 evaluating internal cost-saving opportunities, many are now preparing to pull the trigger on outsourcing after a lengthy due diligence process, says Keeler. 

But it may still take some time for deals to be struck. "You're choosing a partner," he says. "And because of how invasive it is, not only to migrate the processes but to adopt [new] technology, this is a relationship that is going to last for a while. It's not a plug-and-play type of scenario."

Keeler expects upcoming outsourcing deals to range from component-based relationships to full-service solutions. "You can do it in a narrow range, and you can do it in a broad range," he says. "I wouldn't put my money on one or the other. A lot of it comes down to pricing."

Managers and consultants alike have predicted a rise in outsourcing for several years. Keeler attributes growing interest in the approach as the result of a four- to five-year trend as firms narrow their focus to investment management. Some firms will continue to consider in-house operations to be a core competency, he says.