The largest managers point to investor demand and scalability as key drivers of outsourcing decisions. They likely recognise that investors are supportive of outsourcing as a means of separation of duties and independent oversight in addition to the size and scale of their business requiring external servicing. The technology solutions tend not to be a consideration for the large managers as these entities often have already made signifi cant investment in their infrastructure and have the necessary tools to perform these functions.


Conversely, smaller and mid-size managers are motivated by the lure of skill sets and technology that is best in class. These managers need to move rapidly but have not yet built out their own systems or teams in these areas and can benefi t from utilising the services of a provider who has the requisite expertise. THFJ


FOLLOWING PAGE The Evolving Dynamics of the Hedge Fund Industry Strategic priorities — achieving growth


Fig.6 Hedge Funds


What are the top two primary drivers for outsourcing in rank order of importance?


Over $10b


Reducing costs (it is less expensive to outsource)


25% 5% $2b—$10b 29% 11% Under $2b 20%


Provider provides a skill set or technology superior to the fund’s own


5% 15%


25%


25%


40%


10%


Investor demand


35%


5%


14%


7%


10%


Provide scalability to support growth


11%


42%


18%


21%


10%


20%


Focus resources on core activities


20%


20%


11%


21%


10%


50%


Top primary driver


Second primary driver


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