Two experts examines how outsourcing is affecting the local talent landscape in Australia for graduates looking to enter the sector.
Outsourcing has become increasingly commonplace in the Australian funds management industry. This typically involves the transfer of functions and processes performed in-house to a specialist provider located overseas, enabling fund managers to focus on their core capabilities while outsourced providers manage non-core activities.
Traditional custody activities began as one of the primary outsourced functions, which has grown to include fund administration, investment operations, securities lending and data solutions.
However, Darragh Cleary, manager for investment operations and accounting at Kaizen Recruitment, and Greig Nicholson, partner at Mavin Advisory, unpacked the long-term impact this is having on Australian graduates seeking to enter the funds management industry.
The two professionals argued there is a growing lack of end-to-end knowledge in the talent pool, due to fund management firms using offshore providers and backfilling local roles. The supply of talent available will contract further, they said, leading to higher demand for candidates with a comprehensive skill set.
“With positions at third-party service providers increasingly based offshore, junior candidates in Australia will face a more challenging pathway into the industry,” they described.
“Fewer positions will be available, and those that remain will often involve purely oversight roles of offshore teams or work within a heavily functionalised environment. This will likely affect the development of junior professionals aiming to grow their careers in the industry.”
The experts pointed to possible solutions to solve this issue, such as service providers developing rotational programs across functions or custodians allowing Australian staff to complete secondments in offshore locations to enhance their skills.
“The nature of positions has evolved and will continue to evolve, with overseeing and managing relationships with custodians and service providers being a key responsibility for investment operations professionals and there is now a definitive need for them to have a bespoke relationship management skill set.
“These positions are likely to remain in demand as fund managers seek to maintain investor confidence, manage risk, and adhere to regulatory compliance.”
Looking ahead, the two professionals added: “In an ultra-competitive environment, the growth of offshoring is likely to continue, which may further impact the development of investment operations talent locally in Australia.”
Earlier this year, Mischa Bennett, managing director of recruitment firm Capital Executive Search, shared the four areas where fund managers are actively hiring.
These include the private credit space, funds associated with the energy transition, ESG and impact funds, as well as family offices.
