The Case For Outsourcing
COVID-19 Reflections & Future Implications
As the financial services industry adapts to working remotely and tests business continuity, Outsourced Services and Providers have supported firms through this transition. Across the spectrum from new launches to established managers, we saw the majority of funds migrate to a remote set-up by mid March 2020. Below are our insights from clients, service providers and allocators on how firms are leveraging Outsourced Services and Solutions.
Key Considerations: Why are managers leveraging Outsourced Solutions and Services?
Disaster recovery planning
Optimize internal infrastructure
Further bolster existing continuity policies
Access to an experienced team
Address key-man risk concerns
Minimize cost and disruption
Short-term spikes in volumes
Balance front and back office execution requirements
Flexibility to scale up and down
Increased comfort from the ODD community
Future Implications for Outsourced Solutions and Services
Events in our industry can have lasting impacts on businesses and best practices. We saw rise in importance of third party fund administrators to be the independent books and records for funds post Bernie Madoff.
Outsourcing may be the next endeavor for business continuity.
30% of managers we polled recently said they were more likely to consider outsourcing solutions and services as a result of COVID-19.
Trends in Outsourced Trading
Jefferies has observed a growing trend in New Launch Hedge Funds choosing to outsource their trading function at launch.
But it’s not just start-up hedge funds leveraging an Outsourced Trading Desk. Established Firms use Outsourced Trading to back-up their own trading solutions, and further bolster continuity policies.
The Jefferies Outsourced Trading Desk observed a significant increase in client activity and handled more inbound calls and trades from clients than any other month since inception in June 2018.
50% of the trading activity that Jefferies Outsourced Trading Desk saw in the month of March was from Established Hedge Funds and Long Only Firms.
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