Deutsche outsources pension advisory to India’
Oct 31st, 2006 | Filed under: CAPM / Alpha TheoryBy: Carolyn Bandel, IPE
Published: October 31, 2006
In “The Search for Talent is the Search for Alpha“, we argued that employee “talent” was analogous to alpha in many ways. In doing so, we also argued that emerging markets represented both new supplies of alpha and, as the Economist had pointed out, new supplies of talent.
Today Deutsche Bank shows us that the link between investment skill and other forms of talent can be quite literal. IPE reports today that DB has outsourced core investment management processes to India. While this does not necessarily mean DB will be exploiting Indian market inefficiencies to any greater extent, it does illustrate that underexploited markets represent a good hunting ground for both investments and investment operations.
And if you consider that the creation of alpha really requires two things: market inefficiencies and the skills to exploit those inefficiencies, then DB is effectively exploiting “Indian alpha” – even though they may not be investing more in Indian capital markets themselves
Deutche Bank isn’t the only global financial institution to look to India. Sure, administrators have been attracted by a cheap and highly qualified talent pool for years. But now many higher-order activities are beginning to move there.
The question is: are these jobs being “off-shored” because they have become commoditized into what McKinsey would call “transformational” jobs or has India moved sufficiently up the value-chain to support McKinsey’s “tacit” jobs.
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