Investment companies continue to outsource the functionality of their front office to service-based providers in the financial industry. The reasons for this approach are numerous, but improvements in efficiency and productivity remain the goal for most organizations.
Additionally, the trend shows signs of increasing over the last few years, after first appearing this century. Let’s take a closer look at the reasons behind the outsourcing of front office personnel in the financial world. This staffing strategy offers many advantages to forward-thinking investment organizations. Is it the right short-term approach for your company hoping to become more efficient and profitable?
The Reasons Investment Companies Outsource Front Office Roles
According to a recent survey, many financial companies already outsource some of their middle and back office functionality. This approach applies to banks and broker dealers as well as those in the institutional realm. With this trend now reaching the front office, the reasons for this strategy remain varied.
One reason is that outsourcing allows companies to focus on their core competencies. In fact, this same reason is why many businesses outsource their IT functions to Cloud-based providers. This enhanced focus also allows firms to also concentrate resources for other internal purposes.
Of course, improving operational efficiencies and reducing costs also cause investment firms to outsource; again similar to IT organizations. Other important reasons include spreading risk and reducing the time-to-market for new investment products. Still, many organizations remain hesitant before deciding to outsource front office jobs. Assuming only positive impacts to the business is a risk, after all.
The Risks of Front Office Outsourcing
Outsourcing the customer-facing portion of an investment company includes significant risks. Reduced communication and control are just two issues that need consideration. Investment managers at the parent organization also might not be able to respond quickly when issues arise after outsourcing.
Financial institutions also need to compare potential providers before engaging an outsourcing project. If the chosen firm is saddled with a poor technical infrastructure any efficiency improvements might not materialize. In an industry with significant technology advancements, this is a critical issue when it comes to competition. Ultimately, the chosen vendor needs a sterling reputation.
In the end, tech companies serving the financial world need to pay close attention this front office outsourcing trend. After all, expect many opportunities for the forward-looking services provider in this thriving business sector. To the ones with a reputation for great tech and superior services go the spoils!
Looking for IT Talent?
If your financial company needs an influx of tech talent, connect with The CERES Group. As one of the top IT staffing agencies in New England, we provide talented candidates to help your FinTech operations. Schedule a meeting with us soon!