In the United States and all over the world, the prevailing economic climate has made the investment and securities industry more complicated than it ever was. Hedge funds firms, in particular, face immense pressures in terms of performance, as well as transparency and accountability amid a highly volatile climate.
Outsourcing has emerged as a viable solution for many firms dealing with such pressures. But it is worth noting that the idea is always first met with a few apprehensions: Would it not simply bloat the operational costs? How hard would it be to find an outsourcing partner that meets our firm’s needs? How can an outsider understand our asset management goals as a company?
Over time, however, more asset managers are seeing the value of outsourcing, and how it can be truly optimized for meeting the demands of hedge fund management in this day and age,
Through outsourcing, asset managers are able to drive costs down in the long-term. While it requires initial capital outlay, the investment eventually pays off as it eliminates the costs of recruiting and retaining employees, as well as setting up the infrastructure, to accommodate the tasks in-house.
Through outsourcing providers, these asset managers gain access to a pool of professionals as well as innovations that could otherwise take years and millions of dollars to put together on their own. Their level of specialization allows these providers to devote time towards the development of technologies that are tailorfitted to their clients’ needs. As a result, with outsourcing, a firm only pays for the products and services that the company actually needs and uses, and need not spend on so much overhead cost.
By delegating select functions to outsourcing partners, hedge fund managers are able to offer increased focus on core functions. They can dedicate more time and attention towards developing strategies for fund growth, and finding opportunities in emerging markets. That is, with the support of middle and back office, which will provide them with pertinent data properly sourced and warehoused, accounting services, as well as compliance management. At a time when the industry very closely scrutinizes hedge funds, outsourcing companies can offer much-needed support in terms of creating and filing reports, conducting compliance audits on a regular basis.
To make the most of outsourcing services, the key is to find firms with scalable and flexible solutions, a team of qualified professionals, and thorough understanding of the demands of today’s market.
