Outsourcing Financial Activities

The current financial storm and the tight margins have motivated business houses throughout the world to increase the use of third parties to carry out activities that the businesses themselves would normally have undertaken. The message of importance of outsourcing is crystal clear, to organizations that have survived this crisis. Hence, outsourcing is increasingly used as a means of both reducing costs and achieving strategic aims.

Knowledge Process Outsourcing (KPO):

Knowledge Process Outsourcing (KPO), considered by many to be the future of outsourcing, is a trend which is catching the fancy of such business houses. The increasing confidence in outsource providers skills coupled with their iso 27001 standardization are some of the key features that make KPOs such as S.G. Analytics attractive.

Important Points while considering KPOs:

Some of the key points that one should look out while outsourcing financial activities are:

1. Every organization operated with some strategic long and short time goals. The service provider should relate to these goals and strengthen efforts to achieve them.
2. The total cost is always the driving factor but one must realize that despite the costs the quality should not be compromised.
   
3. Security issues are vital and should be given ample thought and time during the discussions. Financial activities form the keystone for the success of a company, hence look out for certification such as ISO 27001.
   
4. Review of the past projects gives a clear picture of how the company operates and the quality of service that can be expected.

Key Benefits of KPOs:

Save the valuable time and money is possible for business houses when they start outsourcing their financial activities to the KPOs.

Outsourcing Fund Administration

Financial valuation is the many a times considered as the corner stone of applied mathematics and economics. The performance of fund managers are many a times judged on the Net Asset Value (NAV) of the mutuals funds they manage. Computing the NAV requires valuation of funds assets and liabilities. This task is cumbersome and takes a non negligible amount of time.

Impact of time spent in computing the NAV:

Over the years the time spent by fund managers in administrative tasks such as
such as calculations and reporting of the NAV has increased. As a results of which they were forced to cut short on their analysis to devote time towards such fund administration tasks. Over the years the above activities which complement the management of the assets are being considered for outsourcing.



Role of KPOs:

Fund managers have been seeking the help of KPOs to administer their funds as they have realized that such intensive work is not efficient for internal staffing as staffing cannot commit a reliable long term support. Such forms of outsourcing is important not only for the fund administration but also for fund analysis as structured and organized records are useful in all the phases of fund management.

Outsourcing of Financial Research

Over the years one of the prime concern of fund managers and other investors is the valuable time spent by the analysts on analysis. Studies have shown that a considerable amount of time was spent by the analysts in activities such as sourcing of financial information, preparing reports, populating the data required for financial research, tracking information related to mergers and acquisitions etc. Given the current mayhem at the stock markets and the need for detailed analysis of the situation has motivated the visionaries of many successful organizations to outsource a considerable amount of work to KPOs which specialize in financial research and analysis to improve their turn around time.



Services Provided by KPOs

The services of such KPOs include financial information aggregation investment research analysis, market intelligence, reporting and publishing support. The services of KPOs cover all approaches of investment decisions which encompass making an investment choice based on funds, equities, sectors, countries etc. Their clients include private equity and hedge funds, large investment banks, asset management companies, corporate finance groups, fund administrators and other financial institutions. This is achieved with a finesse as KPOs design, create and deliver customized solutions to Investment banks, Asset management companies, Private Equity groups, corporate finance groups and Large Institutional investors. One the key areas in which KPOs operate are the writing of annual reports which ease the process of mining the data present in the annual reports, and sourcing the information required for financial research. This is useful for studying and predicting the future of an organization but also giving key insights on the working of the whole sector.

Such KPOs not only help their clients create value by providing customized services which are backed by domain expertise and high-end analytical skills but they also work closely with their clients to deliver services that adapt to their evolving needs.