Outsource your hedge fund's back office and middle office work.
Outsourcing services is one of the most common ways for hedge funds to reduce costs and increase profitability. Outsourcing allows you to pay someone else to take care of a task that would be too time-consuming or expensive for you to do yourself.
It can also lower your risk by relying solely on specialists to handle your fund’s back office and middle office functions. If you’re thinking about outsourcing your back office and middle office services, then this article will help you to get the details of hedge fund back office outsourcing and hedge fund middle office services in India.
What is Back Office and Middle Office?
The back office and middle office of a hedge fund are the administrative and operational tasks that take place outside of the trading desk. Back office and middle office include tasks such as fund administration, compliance and accounting. Hedge fund outsourcing services for back and middle office work are an effective way to cut costs and increase revenue.
Hedge funds are typically portfolio managers who invest in a variety of assets including stocks, bonds, commodities and options. Back office and middle office tasks come into play when managing a hedge fund. The back office is where fund administrators manage the daily operations of a hedge fund, like accounting and record-keeping. The middle office, meanwhile, is where trading takes place.
Why Outsource Back Office and Middle Office Services
As a hedge fund manager, you’re likely already aware of the challenges of managing a hedge fund. The shortage of skilled workers, rising costs and regulatory burdens can make it difficult to keep your fund running smoothly. Additionally, there’s a growing demand for outsourcing hedge fund service providers.
According to a survey, asset managers and fund managers wanted to focus on cost control, improved quality and accuracy and improving efficiency in fund operations. To solve this problem, they are looking for outsourcing, which helps in solving and achieving all three targets. In fact, 9 out of 10 investors say they’d consider using an outsourcing service if it provided cost savings, according to a survey by KPMG. That’s why outsourcing your back office and middle office services could be a good business decision.
Three primary reasons why fund managers are choosing hedge fund outsourcing services.
Selecting a Back Office and Middle Office Service Provider
If you decide outsourcing is right for your hedge fund, you’ll need to select a back office and middle office service provider.
In order to find the right one, start by assessing your needs and the type of services your fund requires. Your best bet is to work with a consultant who’s familiar with the unique challenges posed by your fund and industry.
2. Selecting Services:
Once you have a consultant, determine which services you’d like to outsource. You might consider taking on services such as fund accounting services, information technology (IT), data management services, compliance services and more. Look at other funds and what’s available in the market to get a sense of what services are being outsourced and by whom.
Last but not the least, cost cutting is the primary reason for outsourcing the work and you can easily customize the services such as fund administration services, data tracking services, financial statement preparation services, software, consulting and more based on your budget.
Cons of outsourcing your back office and middle office services
If you decide to hire hedge fund back office services and hedge fund middle office services, you should also be aware of the disadvantages of bringing in a new team to your firm.
Outsourcing a large chunk of your fund’s back office and middle office services could cause headaches. You’ll need to train your new employees and make sure they understand your unique needs. That could be challenging if they’re working with a different type of investor.
2. Regulatory Issues:
You might also run into regulatory issues if you outsource your fund’s back office and middle office services. You’ll need to make sure all your outsourced employees are registered with the CFTC and FINRA.
3. High Operational Cost:
And if you’re outsourcing your fund’s back office and middle office services, you’ll need to ensure the operational controls in your fund are in place.
Outsource your back and middle office work to India
You can certainly choose to outsource your hedge fund outsourcing services to India, which is one of the world's favorite destinations for KPO services and you get the benefits of cost savings and access to skilled professionals.
IBN Tech is one such firm, having its global delivery center in Pune, India and we provide the best outsourcing services to fund managers in back, middle and family office outsourcing across the US, UK, and Europe with over 10 years of experience.
As a result, selecting the right hedge fund outsourcing services for your back office and middle office is not a difficult task if your research is thorough, you have a transition plan in place and you choose the correct outsourcing location, such as India, allowing you to reap the most benefits from these services while improving efficiency and cutting costs.