Fund managers embrace outsourcing to solve operational challenges: Gen II
NEW YORK, UNITED STATES — Fund managers are increasingly turning to outsourcing to address ongoing challenges in talent acquisition, retention, and operational efficiency.
According to Gen II’s Core Alternative Managers Mood Index (CAMMI), 46% of fund managers are outsourcing core operational functions, signaling a growing reliance on external support to manage key tasks.
Alex Di Santo, Head of Private Equity in Europe at Gen II, explained the appeal of outsourcing: “Firms really see the benefits of these co-sourcing arrangements because they still control their data but have access to a larger pool of talented people who can integrate with their business and improve efficiency.”
Co-sourcing — a hybrid model combining internal control with external expertise — has gained traction, with 29.8% of respondents favoring this approach. This model enables firms to fill staffing gaps while maintaining operational continuity and efficiency.
Technology adoption faces challenges but remains crucial
Operational efficiency remains a priority for fund managers, with 15.2% identifying it as a significant challenge. Many firms are leveraging technology to streamline processes and reduce costs.
However, integrating new technologies is no small feat; 21.2% of respondents cited technology adoption as a major hurdle, while 20.8% highlighted the need for better data management systems amid growing reporting and regulatory demands.
Di Santo noted that investor expectations are driving the push for real-time data access: “Clients are asking us for platforms where they and their investors can log in, analyze data in real time, and dig deeper.”
Strong data infrastructure is becoming essential for maintaining competitiveness in private capital markets.
Cybersecurity concerns grow alongside tech use
As fund managers increasingly rely on technology, cybersecurity has emerged as a critical concern.
CAMMI revealed that 27% of respondents emphasized the need for stronger protections against threats such as ransomware, phishing attacks, and data breaches.
Di Santo highlighted the evolving nature of cyber risks: “Technology is constantly evolving, which means the threats and types of attacks are changing too.”
Looking ahead: Outsourcing and innovation lead the way
Despite challenges in talent retention, technology integration, and cybersecurity, fund managers are doubling down on outsourcing and innovation to remain competitive.
Increased spending on tech-driven solutions and robust cybersecurity measures reflects the industry’s commitment to operational resilience and investor satisfaction.
