Outsourcing Eclipses Cost in Reference Data Criteria, Say Vendors

Reference data management has become one of the most popular functions for firms to outsource, according to outsourcing vendors.

Washington, DC-based Elena Christopher, vice president of financial services at Mobius Knowledge Services, a content and data service provider, led a panel discussion on outsourcing at the FIMA conference in London last week, and told Inside Reference Data that firms are turning to outsourcing to meet the higher standards now being expected of data. Survey results published by data process and analytics services firm eClerx also show that senior decision-makers in financial services consider outsourcing to be most relevant for reference data management.

“Outsourcing is becoming more significant for reference data management," said Christopher. "I have been in the outsourcing industry for about 20 years at this point, and that time-span lets you see the peaks and troughs, and when it is in favor and when it is not.”

She continued: “Data has become elevated, which means it is more visible and there is perhaps more budget given to it. You quickly get to the question of, ‘How do we actually achieve all of this?’ and part of it is technology and part of it is in-house, but part of it is through the use of partners – hiring that expertise to come in and assist you in achieving these new goals.” 

During the panel discussion at FIMA, delegates gave their views on outsourcing, offshoring (the use of a captive partner in a geographically remote location) and nearshoring (using an internal or external provider in a location that is close to the main organization). Christopher said there was no definitive answer on which is best: “Any of them can be successful provided you have done a very good job of defining exactly what it is you are trying to achieve, making it measurable and having it well defined.”

Christopher emphasized that cost is not the most important benefit of outsourcing, and that many firms are turning to outsourcing to have greater global coverage: “Now there is more of a follow-the-sun approach, where you have a partner or a captive in India, you retain a few people in London and then you have some folks in New York or Chicago. There is that driver too to have local market coverage.”

New York-based Alberto Corvo, managing principal of financial services at eClerx, said reference data management is a popular function for firms to outsource because they are still able to retain a high level of control over it: “If you set it up the right way and with the right partner, you can have a lot of control. In a sense you can say, ‘Ok, this is the type of data we need, go find it, clean it and normalize it and get back to me.’ You don’t need to give an outsourcer access to your system, so it’s much faster to do. You can have a very tight SLA. You can do the checking before you use the data. So it is a very good way for people to dip their toe into outsourcing.”