These days, outsourcing is a crucial part of businesses' cost-cutting and talent-acquisition strategies. All business processes can be outsourced by employing third parties virtually to perform back-end work. When technology was first being developed, businesses had to hire inside personnel to carry out such tasks
But today, everything has changed. Businesses are becoming more aware of the benefits of utilizing third-party service provider support. The development of technology, including the cloud architecture, has greatly facilitated offshore hedge fund back office services. According to the report, the reasons for outsourcing back office operations by hedge funds is to get access to expert alternative industry professionals who understands the backend operations. and more responsive end-user support.
Benefits of Outsourcing Hedge Fund Back Office Work
Fund managers make the decision to outsource fund accounting and administration work. Many fund managers are of the view that it is not possible to handle everything in-house and can reduce the operating expenses by outsourcing some of the primary administrative work across all sizes, such as tax and accounting work, HR, CTO, etc. Therefore, the five benefits of hedge fund back-office outsourcing are:
1.Reduction in Cost
There is a decision to be made in accordance with how much to spend on technology, human capital and outsourcing firms, thereby making the right mix for the hedge fund house's proper management. Some of the factors that can affect this decision are the lifecycle stage at which the firm is operating, its assets under management (AUM), the combination of fixed and variable expenditures and so on.
Businesses can cut their overall operating costs by taking advantage of hedge fund outsourcing services. Since a third-party fund back-office services provider is handling the work, expenses for training, purchasing resources and the necessary technology for high-quality work delivery, as well as other overhead expenditures, are kept to a minimum.
2.Increase in Productivity
Companies’ core team of professionals can utilize their working hours on the fundamental functions of your business operations because other individuals are focusing on less crucial chores. This also implies that your company will produce more.
In addition to ensuring that you hire professionals, outsourcing can help hedge fund businesses ensure that they are outfitted with the most recent equipment and methods for providing high-quality services.
4.Efficiency and Increased Profits
Backend work is generally repetitive in nature, which comes with a lot of need for human capital and costs. Therefore, outsourcing this work to a tech-enabled firm can easily reduce the workload of the in-house employees, thereby allowing them to focus more on core operations. It also reduces the number of employees to handle in-house, which is a challenging and time-consuming task for all the managers.
As a result, you're able to avoid a variety of business hazards, such as failing to please your own customers, falling behind on deadlines and other hassles associated with managing an additional work force in your firm. In addition, hiring offshore professionals allows you to earn more profit because you have cheaper costs but still receive high-quality work.
5.Access to Latest Technology
Managing the accounting work by hedge funds businesses that handle large AUMs at a time through spreadsheets and Excel can be difficult. Therefore, moving to cloud-based IT software provided by an outsourcing firm can be beneficial for efficient work handling.
Why choose IBN Tech for outsourcing hedge fund backend services?
The investment managers who decide to outsource can easily customize the services, such as data and document management services, fund administration services, fund accounting services, data tracking services, financial statement preparation services, etc. taken from the outsourced firm. With all these advantages, outsourcing backend support services is in greater demand. Because of this demand, outsourcing firms in India have responded. Now, there are many qualified companies available and willing to take on this opportunity.
IBN Tech is one of the best hedge fund service providers with over 15+ years of experience. From its global delivery centre in Pune, India, we serve clients such as MAN (FRM) Group (UK), (USA) and others. The list of services we provide in the backend are fund and index performance tracking, fund exposure tracking service, trade position processing, document management service, NAV calculation, shadow NAV calculation, data reconciliation services, fund P&L allocation, financial statements preparation, manager and incentive fee calculation, audit support and contact data research.
Hedge fund back-office outsourcing is the most popular choice among fund managers and investment managers all over the world because it simply reduces the inefficiencies of handling backend work in-house. It’s simply the process of resource management and assigning some of our work to a team that can handle it more professionally and at a much lower cost than you could do internally. However, keep in mind that it is critical to choose the right partner as you provide it with private data and manage it with regular updates. Once this is done, you are sorted and can focus on investment opportunities and maintaining happy investor relations.