Outsourcing is a trendy word in business nowadays. In short, it means delegating particular operations, a part of a project, or a whole one to a third-party professional service. Usually, such services provide expert-level employees for almost any task you can imagine, from software solutions to accounting and investment management.
COVID-19’s Impact on Hedge
Hedge funds are partnerships of investors, who are gathered with one goal in mind – to maximize profits and minimize risks. There can be many investors in the hedge pool, but they are managed by one general partner. The pool provides the finances needed for investments. The general partner, in turn, manages them and takes the responsibility to apply particular strategies to gain profits and minimize potential risks.
But what is outsourcing in hedge funds and how did COVID-19 contribute to it? Well, it’s actually pretty simple. Before the pandemic, all such partnerships stuck with the traditional form of work management. You have the office, the employees who need to physically work there, the managers to monitor and control their performance, and other workers.
Such a model has some advantages, like security and easy control over the workers. Yet, nobody could imagine that working from home for such a fund would be even possible. Everyone was just too used to the traditional methods to even think about changing something.
Yet, the global pandemic and quarantine regulations changed that dramatically. Many people now stay at home, and many offices aren’t allowed to let in all the stuff. That’s when everyone, hedge funds included, started working remotely, as there was just no other way to continue operations and earn money.
With employees now working from home, the partnerships found out that some processes can be done remotely. That means, not only during the pandemic but always. It saves a lot of money in many aspects and increases efficiency.
That’s when the investors realized that outsourcing, which was commonly disliked in the business society, is the perfect opportunity. It’s not a cheap solution for those who can’t do anything themselves anymore. It’s a key point in improving many crucial aspects of hedge funds operations now.
Hedge Funds and Outsourcing
Outsourcing particular processes is an essential part of a hedge fund now. Investors work with trusted specialists like Develux who provide top-level services. These companies can take full responsibility for the tasks they are given or provide some additional assistance to already existing teams.
The model of the relationship between the fund and service can be easily negotiated, adjusted, or changed if needed. Need a whole pool of operations done? Need some additional workforce? Want to scale up? Outsourcing services can do anything you want, provided one can make their requirements clear and of course, pay the negotiated price.
And with the quarantines everywhere, delegating basic operations to third-party businesses has become a common thing. Some entrust their accounting needs, while others just increase their staff. Also, many funds and companies hire specialized services to supervise their workers and provide top-level security for communication.
Benefits Outsourcing Brings
Now that we understand how it works and how COVID-19 helped to shape the importance of remote teams in hedge funds, it’s time we learn the benefits of outsourcing.
Firstly, dedicating processes to remote specialized teams is always cost-effective. No matter the industry, the size of the company, and the processes. It’s caused by a very simple factor. Such services hire professionals from countries with much lower average payments. For example, from Eastern European ones like Ukraine and Belarus.
This is when you might think that lower costs mean lower quality. Yet, it’s exactly the opposite, and it’s the reason outsourcing is so popular. Employees from these regions tend to have much more motivation and provide even better quality in every aspect than the ones from most Western countries.
That’s why the price of hiring remote teams can be a few times lower than hiring same-level employees inside your country. What’s even more important is the lack of operational expenses, like office rent, equipment prices, and countless other things. Just think about all the saved money, which will become an addition to the investment pool and eventually have a very positive impact on the profits.
Just like said before, the quality of such services is top-level, which obviously has a positive effect on the overall efficiency. That’s because professionals in those teams have deep knowledge of all the needed subjects and are ready to fulfill any of your business needs.
The opportunities outsourcing gives are another crucial factor. If some processes are now done by a third-party company, your own employees can be allocated to more important tasks. The fund or a company can focus on core operations, thus improving both the quality and the efficiency.
The fact that the hedge fund market discovered the benefits of this work model only now doesn’t mean it’s new. Of course, this sphere isn’t as old as banking, for example. But there are many services that have been around for at least a decade. They have huge portfolios of done projects and impressive lists of partners.
That means, they can be trusted. Such businesses have been earning their reputation for years. And if the company you want to partner with provides all the needed documents and other information, while having worked with world-known corporations before, you can be sure that security issues will never occur.
So, it’s only up to hedge fund partners to ask themselves “Does it bring enough benefits? Which of these is not an advantage of outsourcing? Are the risks worth it?”. Because the answer to all these questions is simple – when working with the best companies in this field, there will never be any risks. All the stated advantages of this model will prove beneficial.
It’s just because of the traditionality of the business world that this work model has always been omitted. But thanks to COVID-19, the funds and companies in this sphere can finally increase their profits and effectiveness with the use of outsourcing.