In recent years, the outsourcing model has gained popularity in investment banking as banks seek more flexible resource arrangements. Outsourced investment banking analysts play a supplementary role to in-house teams, specializing in financial modeling, valuation, due diligence and other technical work. This new career path also creates more opportunities for finance professionals given the lower barriers to entry. As outsourcing penetration increases, outsourced investment banking analysts are poised to grow in both numbers and importance.
Outsourced investment banking analysts focus on specialized technical work
Outsourced investment banking analysts are typically responsible for financial modeling, company valuation, preliminary due diligence, and preparing pitchbooks/marketing materials. They complement in-house teams by providing additional bandwidth and specialist skills, while leaving high-level strategic advice, client relationships and deal execution to full-time bankers. This division of labor allows banks to scale resources flexibly without high fixed overheads. At the same time, outsourced analysts can build in-demand skillsets in a fast-paced environment resembling investment banks.
Outsourcing provides newentry points for aspiring investment bankers
The barriers to entering investment banking have increased considerably, making outsourcing an alternate pathway for aspiring bankers and finance professionals. Outsourced analysts tend to have finance/accounting backgrounds, but not necessarily from target schools or with banking experience. This enables those who previously struggled to break into investment banks, such as career switchers or non-target school graduates, to gain relevant experience. The outsourcing model creates a new talent pipeline that traditional banks can potentially tap into.
The scope of outsourced investment banking analysts is expanding
Initially focused on peripheral tasks, outsourced teams are increasingly working on more value-added analysis. Banks are also engaging outsourcing partners earlier in transaction processes. Along with broader adoption across different bank divisions, these trends underline the growing strategic importance of outsourced investment banking analysts. Consequently, career progression opportunities are improving with some outsourced analysts able to transition into client-facing, in-house roles.
Outsourcing penetration in investment banking will continue rising
While still a small part of overall investment banking expenditure currently, outsourcing penetration is expected to rise steadily driven by banks’ cost pressures and need for greater flexibility. The crisis has also accelerated adoption of remote working models. This will likely create even more career opportunities for outsourced investment banking analysts.
In summary, outsourced investment banking analysts play an expanding supplementary role focused on specialized technical work. Outsourcing also creates alternate career pathways into investment banking, which will see rising demand going forward.