All industries are undergoing significant changes with a number of institutions seeking innovative solutions to cut costs and generate profits. Organizations have started outsourcing a plethora of processes like customer relationship management, data processing, human resources, data management etc to a business process outsourcing company. It enables them to refresh their tools and solutions on a more frequent basis and keep pace with technological developments, which in turn helps gain a competitive edge while also meeting the evolving needs of the customer.
Outsourcing is an essential driver of growth for any business and it also helps them enjoy a competitive edge compared to those who opt for in-housing business activities. Hiring these services helps to generate growth by delivering competitive returns to stakeholders as well as outstanding products and services to clients. It also enables businesses to focus more effectively on the areas in which they can deliver a more competitive edge.
Excellence Is Key
In an article in “HedgeWeek”, Jack Seibald, Managing Director and Global Co-Head of Prime Brokerage & Outsourced Trading at Cowen, said that the most important of lesson that the outsourcing industry has learned is that the solution offered absolutely, unequivocally needs to be of a calibre that will meet, and even exceed, the expectations of investment managers. This means that the delivered products should of top quality that comes within a cost that is reasonable to the clients.
Outsourcing service providers are raising the stakes when it comes to their provision of solutions and resources due to the several trends emerging in outsourced services. Today, institutional investors are much more comfortable with outsourcing by fund managers of non-investment related functions, including middle and back office support, COO/CFO functions, compliance, and trading. This is because fund managers are best suitable for focusing on core competencies in security selection and portfolio management.
Investors have now realized that the skills required to manage an investment is different from those required for effective active portfolio management. Seibald also added that any efforts by portfolio manager on investment management can lead to distraction from where their complete attention should be dedicated. Allocators appreciate an additional set of experienced eyes on fund management activities to ensure another layer of checks and balances on their investments. Seibald stated that with their newly launched funds over the past year, building internal teams for trading and operational support was very much the exception, because the vast majority chose to outsource at least some functions.
Factors That Are Beyond Cost
One of the main factors that determine outsourcing trends is cost and the potential savings from engaging outsourced services. There are other factors also that drive the decisions to outsource such as, many firms do not have the capacity and resources to hire a team to compete with those being offered by outsourced providers.
Today the calibre of outsourced services has improved and firms look for experienced and skilled professionals providing the best solutions. The next factor is flexibility of the outsourcing provider. With flexibility, any change in the firms – whether it’s outsourcing to a different service provider or building the infrastructure internally – can be easily achieved. Efficient outsourcing of non-investment related processes allows portfolio managers to stay focused on portfolio management and away from distractions related to managing internal staff and infrastructure.
Seibald further added that irrespective of how articulated, designed and intentioned the outsourced solutions are, what matters most is the quality of the team delivering the service.
The key to successful adoption of outsourcing activities and engagement is quality of the team and their services. If this is handled effectively and with precision, the service will provide various benefits. Reliable outsourcing firms empower businesses, enhance business efficiency and help them stand out among the competitors. By outsourcing to an experienced business process outsourcing company, businesses can focus more on the areas wherein they can achieve a more competitive edge.
