Don't be outpaced
Funds can be outpaced when business models evolve at a different pace to the solutions available on the market to support them. Rather than fully contracting out for support, co-sourcing allows your firm to work with external experts to deliver solutions. This approach can help an entire organisation, increasing value yet retaining control over key processes.
What is co-sourcing
Co-sourcing can boost a team's capabilities with additional knowledge and expertise that would take time and resource to develop in-house. The combination of the two resource pools differentiates co-sourcing from classic consultancy services.
Why does co-sourcing work in the Private Market Funds Industry?
A co-sourcing solution is particularly valuable in the world of fund administration, where regulatory compliance, reporting standards and operational demands are constantly evolving.
Here are some of the key benefits:
- Operational efficiencyCo-sourcing allows fund managers to tap into the operational expertise of specialised providers while retaining oversight of core activities. This helps streamline back-office functions like accounting, NAV calculations, compliance and investor reporting.
- Cost-effectivenessBy co-sourcing, firms can reduce the overhead of building full in-house teams, while still benefiting from a shared service model.
- Regulatory expertiseWith regulations becoming more stringent (such as ESG/SFDR, FATCA, CRS, and AIFMD), co-sourcing partners offer specialised knowledge and expertise to ensure compliance. Firms can benefit from a co-sourcing partner's familiarity with complex reporting and filing requirements across different jurisdictions.
- ScalabilityCo-sourcing offers flexibility, enabling fund managers to scale their operations as needed. This is particularly useful in periods of growth or market expansion, where having an adaptable partner can reduce the friction of adjusting internal processes.
- Focus on core competenciesFund managers can focus on investment strategies and portfolio management, leaving administrative tasks to the co-sourcing partner. This can lead to improved performance by allowing managers to concentrate on what they do best.
- Co-sourcing vs outsourcingWhile outsourcing involves handing over entire processes to a third party, co-sourcing involves a shared responsibility where both the fund manager and the service provider work in tandem. Co-sourcing offers more control and collaboration compared to traditional outsourcing models, providing greater transparency and adaptability. The co-sourcing model is increasingly being adopted by managers within Private Markets where the complexity of operations and regulations demands both in-house control and external expertise.
- Examples of co-sourced servicesFund accounting and reporting; Regulatory compliance and risk management; Investor relations and reporting; Transfer agency services; Tax compliance and structuring.