Many Investment Firms Now Outsourcing Services

Research recently carried out suggests that many City firms are now moving towards outsourced services, rather than running everything in-house.

The outsourcing concept for regulated firms has taken many years to become a readily accepted alternative. However, the steep and rising costs involved to remain compliant coupled with high infrastructure and salary costs are forcing regulated firms to move towards a more compatible structure in order to remain competitive and profitable.

Stephen Pinner, Managing Director of Goodacre UK which conducted the research, said:”Firms within the wealth management sector have had a range of clearing and outsourcing services available to them for some years. However, as a new set of cost, legislative and regulatory pressures increase and new service providers emerge, many business owners are re-evaluating their infrastructure.

Interestingly, buy side firms such as Hedge and Pension Funds who have similar pressures to the sell side, can also now take advantage of support services offered by regulated organisations. It is now possible for these firms to outsource a variety of requirements, including trading. A small hedge fund employing a couple of dealers could save as much as £750k, perhaps more, by using an outsourced alternative. Quite simply, any benefits from the ‘do it all in-house’ approach are being very strongly challenged by the high fixed costs and related encumbrances involved. A switch to specialist outsourcers could deliver significant cost savings and quite possibly, an improved level of service”.