The Future of Fund Administration is Outsourcing – Not Offshoring

The risks of remote work are steep enough within your own company, whether it’s your son spilling juice on freshly signed documents or cyberthreats amid a pandemic in which attacks have shot up 400%.

But add offshored workers into the mix – in regions perhaps more vulnerable to cyberattacks and less conditioned to remote working conditions – and you’ve got the makings of a severe problem.

Unfortunately, for many fund managers, the rise in remote work brought on by COVID-19 has coincided with a years-long offshoring trend in the fund administration space. Since 2018, for instance, State Street Corporation has cut nearly 3,500 jobs – mainly in the U.S. – while continuing to up its headcount in places like China, India, and Poland.

Outsource to a fund administrator that doesn’t offshore

The drive towards third-party fund administrators came about for a variety of critical reasons, including increased regulation, rising internal costs, advances in technology and growing demand for transparency from investors. In Europe, around 70% of fund managers now use third-party administrators; in the U.S., that number is at about 30% but growing.

Yet outsourcing tasks to a third-party administrator isn’t the same thing as outsourcing tasks to a third-party administrator who then offshores those tasks to workers in lower-cost areas. The supply chain risks of doing so have been thrown into focus by COVID-19 and the large-scale shift to remote work.

What fund managers should look for in a third-party administrator

In contrast to the risks of offshoring, the benefits of outsourcing are clear: namely, that with the right technology platform, a third party can seamlessly adapt to the needs of a given fund in real-time – no matter what its size, or whether it needs scaling up or down.

Additionally, fund managers should look for a third-party administrator who provides:

  • Total transparency. At JTC Americas, Formerly NES Financial, our investor portal offers 24/7 access to the progress, investment performance and (when applicable) the social impact of your fund’s projects.
  • More efficiency. The right technology platform should be a one-stop-shop, providing scalable solutions, real-time NAV calculations, built-in compliance and accounting functions, automated reporting capabilities, and high-performance document management.
  • First-rate cybersecurity. All employee computer systems should be equipped with a secure VPN to ensure the digital protection of all data. Keeping your data – and that of your investors – secure means using a third-party administrator who knows how to protect it against cyberattacks or accidental loss; create backups of your systems; and securely house, duplicate, and encrypt those backups.
  • A global reach. As third-party fund administration grows in popularity, we should expect continued consolidation in the space. Maintaining efficiency, transparency and security as fund administrators grow is vital – and another reason why a robust tech platform (instead of additional offshore employees) can be an invaluable asset.

Get More

Like what you’re reading? Subscribe to the JTC Americas Newsletter to receive similar articles and exclusive insights from our experts.

  • This field is for validation purposes and should be left unchanged.

Fund Services in Ireland: Enhanced Capabilities, New Opportunities

A webinar hosted by JTC
Wednesday, March 29th, 2023
2:00 PM – 3:00 PM EDT

Register now to reserve your space!

JTC can provide a comprehensive range of fund services from Ireland designed to take U.S. firms from local to global. Could Ireland be your firm’s new bridge to Europe?

The free online event will cover the advantages of launching a fund in Ireland as well as JTC’s enhanced suite of services. The panel will be moderator by JTC’s Wouter Plantenga, ICS Head of Group Client Services, and feature representatives of JTC, Ballybunion Capital, and INDOS Financial, all of whom have extensive experience providing financial services solutions to Irish and global domiciled fund products and vehicles.

This is a perfect opportunity to learn about Fund Services in Ireland from the best minds in the industry, so reserve your spot today!

Register Now