The Great Resignation’s Lasting Impact on the Hedge Fund IT Support Model

While the Great Resignation may be behind us, firms are still wrestling with its impact on the industry’s IT support funding model. As hedge funds continue to reassess their approach to technology infrastructure and support, many have increased outsourcing efforts to ensure technological resilience in an uncertain environment. Agio’s 2023 Managed IT Trends Report offers compelling insights into this strategic transition and its evolution, implications, and promising prospects. 

How are hedge funds coping with the challenges of a reduced workforce? 

The Great Resignation created a ripple effect that resulted in more than a lack of human resources. Not only has it affected the ability to hire and retain skilled IT professionals, but labor costs are fluctuating and there is a shortage of specialized expertise. The result is service inconsistencies, and as hedge funds search for a solution, they’ve found additional outsourcing is more attractive than ever (regardless of whether they currently insource or outsource).   

Smaller firms with limited resources, particularly those with under 75 employees and/or operating for fewer than five years, are among the most affected. These subgroups reported a resounding 100 percent intention to increase current outsourcing efforts in response to the Great Resignation. This could be because smaller funds with limited resources feel employee turnover more acutely than larger firms that can absorb the hit more easily. 

Across functional roles, the consensus indicated increased outsourcing as well. Interestingly, the Chief Information Security Officer (CISO) role emerged as a significant driver of increased outsourcing, with 80 percent indicating a substantially heightened reliance on third-party providers. The critical nature of cybersecurity and the demand for specialized expertise are likely motivating factors behind this trend. 

Chief Compliance Officers (CCOs) and Chief Technology Officers (CTOs) shared near-unanimous consensus, with 100 percent and 98 percent, respectively, reporting increased outsourcing as a result of the Great Resignation. This underscores the widespread recognition of outsourcing’s potential to bolster compliance, cybersecurity, and technological innovation. 

Notably, CTOs (98%) were almost twice as likely as COOs (53%) to increase their current outsourcing efforts because of lost talent. However, only 3 percent of CTOs said that increase was significant compared to 44% of COOs.  

CTOs (92%), CFOs (92%), and COOs (82%) who insource are also enthusiastic about turning to an outsource model. 

Why is outsourcing to a third party the overwhelming solution? 

As labor costs rise and the pool of available talent shrinks, hedge funds are seeking alternative solutions to maintain their technological edge. COOs have a unique vantage point here. Responsible for overseeing day-to-day operations, they’re tasked with maintaining operational stability and efficiency and see outsourcing as a viable solution to bridge the gap left by a lack of skilled professionals.  

Additionally, this role is fundamentally tied to the collaboration across various departments, ensuring efficient communication, and aligning strategies. By tapping into the specialized expertise of third-party providers, COOs can ensure the continuity of critical functions, minimize disruptions, and sustain seamless operations.  

Crafting a Resilient Future Through Outsourcing 

As firms reassess their IT strategies, the balance between insourcing and outsourcing becomes a critical factor in their long-term success. By harnessing the potential of third-party providers, hedge funds can navigate the evolving landscape with resilience and agility, ensuring they continue to meet the demands of an ever-changing market. 

Agio’s managed IT services allow you to seamlessly maintain infrastructure health, enhance end-user productivity, and resolve issues fast—all while reducing costs and improving productivity. 

With Agio, challenges become opportunities, uncertainty becomes innovation, and the Great Resignation becomes a catalyst for growth. Contact us today to discover how Agio’s Intelligent IT services can help you maintain resiliency in the face of unexpected roadblocks.