When Investors Bank & Trust assumed the asset administration operations of Barclays Global Investors in the US, it took on 275 employees. Similarly, State_Street added 300 staff with its outsourcing mandate for Pimco, and another 300 when it took over retail fund administration for Merrill Lynch, while JP Morgan agreed to take on 200 of Schroders' staff when it signed the deal to run the asset manager's back office.

Outsourcing of fund managers' back offices to custodians has become one of the industry's hottest trends. But these outsourcing mandates come at a steep price - and could be seen as something of a calculated gamble. The gamble works like this: the custodian pays an upfront fee to win the business, in return for which it gets annuity revenues from servicing the client. But it also assumes a lot of the client's overheads, such as systems, premises and people.