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Oct 04, 2023

What’s trending in IR outsourcing this year?

Almost 30 percent of IR budgets are allocated to external services, IR Magazine research finds

Shareholder registration is the most-outsourced IR activity, with 77 percent of investor relations teams relying on external providers for it, according to recent research from IR Magazine.

Shareholder identification and annual report design follow closely at 64 percent and 58 percent, respectively. These are among the top six IR areas outsourced to service providers, along with proxy solicitation, IR website management and perception studies.

The research also looks at less commonly outsourced areas: crafting an IR strategy is the least-delegated task at just 3 percent of respondents, with corporate communications and financial PR also ranking low.  

In the last five years, more companies have started using external service providers for social media monitoring, which is now at 30 percent, compared with 24 percent in 2018.

Photo credit: ra2studio
Photo credits: Ra2studio

The research further considers what IR teams would outsource if their budget allowed. Perception studies emerge as the activity IROs would most likely delegate, with 33 percent expressing their willingness to do so if resources permitted. When added to the 47 percent that already outsource perception studies, it becomes evident that only a minority of IR teams show no interest in external service providers for this task.

More than three in 10 companies surveyed would also allocate part of their budget to social media monitoring and IR apps, though the latter has dropped from 47 percent in 2018.

Interestingly, the size of the company does not play a significant role when it comes to outsourcing IR-related tasks. This is because large-cap companies have both the budgets and in-house capabilities to execute more tasks internally and therefore they rely less on external service providers than small caps do.

There are still some notable differences based on market capitalization, however. For instance, outsourcing for shareholder identification tends to increase with company size. Similarly, larger firms are more inclined to hire external providers for perception studies than are smaller firms.

Additionally, the research reveals that teams at mega-caps are twice as likely to hire external targeting services as teams at other cap sizes. Only 7 percent of mega-cap teams outsource roadshows, meetings and events, in contrast to around a quarter of smaller companies.