Why Investment Management Companies Should Consider Back Office Outsourcing

Investment management companies operate in a dynamic and highly regulated environment. To thrive in this competitive landscape, they must continually seek ways to optimize operations, reduce costs, and enhance scalability. One strategy that is gaining traction among forward-thinking firms is investment management outsourcing. In this blog post, we will explore why investment management companies should seriously consider outsourcing their back office functions.

Why Consider Outsourcing Back Office Operations?

Outsourcing performance measurement and reporting involves entrusting these complex tasks to specialized service providers. This approach offers several compelling benefits tailored to the unique needs of investment management firms.

1. Specialized Expertise

Outsourcing providers typically employ professionals who are experts in their respective fields. According to a report by Deloitte, 59% of businesses outsource to gain access to specialized skills and knowledge. This ensures that your firm benefits from the expertise needed to navigate these intricate landscapes accurately and efficiently.

2. Cost Savings

Cost efficiency is a major driver of outsourcing. A study by Statista found that 59% of companies outsource to reduce costs. Maintaining in-house back office teams for tasks such as portfolio accounting, reconciliation, and compliance reporting involves significant expenses, including salaries, training, software licenses, and infrastructure. By outsourcing, firms can convert these fixed costs into variable ones, allowing them to allocate capital more strategically and focus on core activities, such as portfolio management

Reasons to Outsource Back Office Operations

Now that we’ve highlighted the key benefits of outsourcing back office operations across various critical functions, let’s delve deeper into the specific reasons why investment management companies should seriously consider this strategy for each of these back office solutions.

1. Focus on Alpha Generation

Alpha generation is the ultimate objective in investment management. By outsourcing performance measurement and reporting, your firm can shift its focus entirely to alpha generation, as the experts handle the intricacies of measuring and reporting on investment performance. This intense concentration can lead to improved returns and, ultimately, greater alpha.

2. Compliance Confidence

Staying compliant and meeting regulatory reporting standards is essential. A substantial portion of companies turns to outsourcing, not only to navigate regulatory complexities but to ensure that they remain in adherence to compliance requirements. By entrusting these responsibilities to outsourcing experts, you can free up your valuable resources and focus more intensely on strategies designed to boost alpha generation.

Outsourcing various back office solutions offers investment management companies a strategic advantage with a specific focus on enhancing alpha generation. It provides specialized expertise, cost savings, scalability, data accuracy, and regulatory compliance confidence across portfolio accounting, reconciliation, performance measurement and reporting, compliance and regulatory reporting, data management, client servicing, technology infrastructure and support, and administrative tasks. By embracing outsourcing, you open endless opportunities for growth, innovation, and client satisfaction, all with the ultimate aim of achieving higher alpha returns. 

Infinit-O partners with the world’s fastest-growing Financial, Healthcare and Technology companies who want to scale more effectively and advance their brand, providing a strategic advantage.

Demonstrated by its world-class Net Promoter Score of 71, we deliver the highest quality business outsourcing solutions and services using our unique data-driven approach – combining powerful technology and high-performance teams within our highly engaged and agile culture. Contact us to learn more about bespoke solutions for your specific needs.