INSOURCING VERSUS OUTSOURCING: THE DATA DILEMMA DEFYING CONSENSUS

September 19,2025-The debate over whether to insource or outsource investment data management has been playing out for decades, yet a definitive answer remains elusive.

At the recent 10^th Investment Data and Technology Summit, a panel of industry experts discussed the optimal model that improves visibility and control of data without dramatically increasing costs and operational overhead. A key question was whether – given improvements in service provider offerings – firms should own and manage their data internally, rely on an external provider, or take a hybrid approach that blends the two.

The reality, which was supported by several audience polls, is that no single model fits all, and what works for one organisation may not suit another.

Scale, strategy and risk appetite were flagged as key factors shaping these decisions. “Over time, firms tend to explore a range of models — starting with an in-house approach might have worked well when fewer internal teams were consuming the data or the needs were less nuanced than today,” Louisa Roberts, Head of Aladdin Client Business ANZ at BlackRock observed.

Roberts said that while large asset managers might start with a “build and maintain” model, the volume and complexity of datasets continues to grow, stretching existing resources —and firms of all sizes are more and more focused on the quality, transparency, and confidence that first-party or third-party data bring to the table.

That, for example, is the case at IFM Investors which employs a hybrid model. Sandra Booth, IFM’s Head of Global Investment Operations, told the conference that the choice for a hybrid model was driven by a greater need for greater transparency, control and agility.

“As our global investment operations scaled, we found that owning data did allow us to respond faster to all the changes and regulatory change demands. However, we also recognised the value in strategic sourcing with providers who can offer specialised capabilities without compromising data integrity,” Booth said.

No one size fits all

Polling at the Investment Data and Technology Summit underlined the industry’s diversity of approaches. A clear majority – 62 per cent of respondents – reported using a hybrid model. Twenty-nine per cent insourced their data management completely, while just nine per cent have fully outsourced the function.

Yet these arrangements are far from static. Almost 40 per cent of respondents indicated they are planning to change their approach. Eleven per cent intend to bring outsourced functions back in-house, while 25 per cent are looking to outsource components currently insourced. Two-thirds of respondents said they were content with their current setup – for now. The drivers of change include evolving business requirements, new technology capabilities and shifting expectations from stakeholders.

Aware Super is one large Australian fund that recently made the decision to move from a hybrid model to an outsourced solution through project ODIN, consolidating all ex-post investment data on a single platform.

Richard Sitosta, Aware Super’s Head of Investment Data Management and Reporting said that three factors were critical to that choice.

The first was a desire to move away from on-premises infrastructure and future proof to a scalable technology by shifting to the cloud. The second was the need for flexibility in a system that could support a multi-year program without becoming obsolete. The third was the requirement for comprehensive coverage across public and private assets within a single environment.

According to Sitosta, the benefits have been significant. The fund now runs a leaner data team focused on governance and strategic change management rather than day-to-day operations. Off-the-shelf components accelerated integration and standardisation.

But there were trade-offs. Because it was an off-the-shelf data model, it was naturally quite complex. The Aware team worked closely with their vendor to create object-based core views that formed a high-performance data architecture. This required simplifying a data model that originally spanned “more than 100 pages” and tailoring this to the needs of the business users.

Others are also rethinking their approaches.

New Zealand’s Accident Compensation Corporation (ACC) currently employs a hybrid approach, but is reconsidering its data strategy in response to changing requirements from the business.

Stuart Bain, Head of Investment Operations at ACC said that the firm’s original set up catered well to middle and back-office requirements. However, he said that these days, front-office teams are exerting more influence as portfolio managers and strategy groups push for integrated systems that deliver a unified data model including performance, accounting and market data in one central location. That, in turn, is forcing firms to reassess governance and access controls.

“The first cab off the rank in my project is setting up the governance structure with the profiles of each of the teams that need to access the data and the rules of engagement for us as a business,” Bain said.

Governance and transparency are critical

Indeed, governance remains one of the biggest concerns in investment data management. A later poll found that immature data governance and lack of trust in data were the largest challenges that Australian organisations faced, cited by 49 per cent of respondents, ahead of organisational change (40 per cent) and technology and security concerns (11 per cent).

Clear accountability, visibility into decision-making and data lineage are essential, particularly in outsourcing arrangements. “One of the biggest challenges with outsourcing when I first started working in this industry was around the lack of transparency, to not be able to see decisions or understand the impact on those decisions. It’s really important that you have that oversight and transparency,” Mark Sedgwick, Head of Data Management Office at Rimes noted.

“You need a systematic approach that shows exactly where data came from and how it’s been used. Given that transparency, you can fully interpret and defend your position to internal and external stakeholders or take corresponding action to address any gaps,” Sedgwick said.

Future-proofing for AI

The rise of artificial intelligence is adding further urgency. As one executive observed: “AI is only as good as the data feeding it. If the data isn’t trusted, neither is the model.”

The demand for greater transparency has consistently been a key facet in the Aladdin roadmap—evolving over time. “Today, clients expect to seamlessly connect to other investment platforms to streamline processes and bolster their investment ecosystem. Aladdin has an open architecture: one that empowers clients to integrate third-party tools, access differentiated content, and automate workflows across the investment lifecycle,” Roberts said.

Roberts said that in order to make information easier to find and use, data catalogues and meta models are now available to both business users and technical users. Timing and quality transparency are also critical features that investment managers expect, including event-driven APIs for real-time data delivery and publishing quality warranties along with remediation processes. “That transparency is absolutely critical,” Roberts said.

The question of insourcing versus outsourcing is unlikely to disappear. If anything, it is becoming more complex as regulations tighten, technology accelerates and AI places fresh demands on data quality and integrity. For now, most firms will continue to operate somewhere in the middle.

“What’s clear is that there is no single right model when it comes to investment data, whether it is owning, sharing, or outsourcing. Each approach comes with trade-offs and the optimal path depends on your organisation, scale, strategy and risk appetite. What does unite us though is the recognition that data is no longer just an operational concern. It’s a strategic asset. As we look ahead, the ability to integrate AI, ensure data quality and build flexible, resilient architectures will be key to staying competitive,” Booth said.