OppenheimerFunds has outsourced their back-office operations to Brown Brothers Harriman. In a mandate that covers $155 billion in assets, BBH will provide fund accounting, financial reporting, fund compliance, tax support, and technology solutions. Speaking to GlobalCustodian.com, Bill Tyree, partner and global head of investor services for BBH, said the mandate will also increase BBHs investor services headcount by 12%, with nearly 200 former OppenheimerFunds employees joining the firm in Centennial, Colorado, west of Denver, where OppenheimerFunds back-office operations are located.
The RFP began in autumn 2009, with three other major custodians competing with BBH.
Tyree pointed to a number of aspects that lead to BBH sealing the deal. Aside from the improvements BBH could offer to the Oppenheimer fund accounting platform, BBH was also keen to establish a major office in Denver, complete with Oppenheimer staff. They knew the story about how we went through the downturn, and how we treated our staff. We didnt do the layoffs, we werent indiscriminately firing, and I think that appealed to them.
Tyree denied that other BBH clients would be put off by the size of the Oppenheimer deal. If you are in the mountain or west coast time zone you are thrilled to hear we are doing this [in Denver], this is not going to be a processing centre. We do plan to fill this office out over time with client service and relationship people. If you are in California, you are going to get a much closer serving provider.
BBH has provided global custody, cash management, foreign exchange and other securities services for a selection of OppenheimerFunds since 2007.
The deal is also the largest mandate win by BBH of its type. In the last two years we have had three or four very large wins and we have become quite experienced in hiring and training up staff at a pretty quick rate, says Tyree.
The move is significant in an industry where large outsourcing deals often go awry. In 2005 Schroders ended its outsourcing relationship with J.P.Morgan, taking 20 million in compensation from the U.S. bank. Although over the past 15 years BBH has avoided large lift-outs, Tyree says I think the difference here is that we are leaving the people where they are. We have replaced the technology, and we have a plan to first parallel, then install and convert over to BBH systems. I think the big outsourcing problem you hear about is that outsourcing providers have been unable to consolidate their clients onto a single platform.