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From Providers to Partners: A New Era of Vendor Relationships in Private Capital

Traditional third-party models are being replaced by co-sourcing partnerships and a deeper alignment between client and solutions provider.

Managers of private capital funds with sizable assets under management (AUM) are familiar with outsourcing. In our recent, extensive research for the Halo Framework with more than 150 heads of private capital firms, nearly all respondents (93%) said they outsourced services.

While early-stage managers may try to cover everything inhouse to curb costs, most quickly reach a point when outsourcing routine operational tasks makes sense.

Fund administration, special purpose vehicle (SPV) administration, accounting, reporting, and compliance are necessary. But they are not core operations for managers who want to keep their focus on originating and optimizing investments. Outsourcing to third-party specialists is a route to greater efficiency.

As funds scale and expand internationally, the complexity of these tasks increases exponentially. It’s enough to persuade many asset managers of the need to move away from a traditional outsourcing model and embrace a new partnership approach.

Outsourcing in private capital

As funds scale, managers struggle to create the right blend of outsourced services. In our research, over half (53%) say that “achieving an optimal outsourcing mix” is one of their firm’s top two priorities. So, what is that optimal mix?

The traditional client or vendor relationship involves contracting a third party to undertake a task or process of limited scope. If the client wants help in another area, they enlist the support of an additional provider.

Some asset managers still outsource in this way, but it can create additional operational issues. Funds can select a best-of-breed solution for every function that requires it. But this can lead to vendor management issues including communication and compatibility problems, breaks in workflows, and significant inefficiencies.

For many funds, this model of outsourcing is no longer optimal. As their organizations become more complex, so does their need for tailored third-party support.

Outsourcing and co-sourcing

Co-sourcing is a partnership model where outsourced service providers become trusted partners and extensions of the fund manager’s team. This model is becoming more common as the operations of private capital funds grow increasingly complex.

Funds want to scale quickly. It’s not unusual to find firms with significant AUM that want to double in size in three to five years. With this growth, old challenges escalate and new ones emerge.

For example, growth often involves globalization as dealmakers cast their nets wide for both assets and investors. Suddenly, managers are faced with the administration of fund structures in multiple time zones, with different regulatory frameworks, legal systems, and on-the-ground resources.

Amid this complexity, ambitious managers quickly reach a tipping point when doing what they’ve always done is no longer feasible. Resourcing their ambitions without piling on cost becomes critical.

Data is the key to growth

For many, “doing what we’ve always done” includes traditional client and vendor third-party relationships. As funds grow, overseeing multiple providers creates a serious administrative burden, especially when some of those vendors are overseas.

In private capital, data is key to efficient growth. Data from multiple sources must be collected, validated, and presented in a commercially useful way. Harmonious data flows drive everything from better front-office decision-making to back-office automation.

Co-sourcing is increasingly popular because partners with a wide view and integrated technology can consolidate data and provide real value. By contrast, the use of multiple vendors with disparate systems creates data fragmentation.

With the benefit of coherent data and their own expertise, co-sources can become strategic partners. They can automate and optimize processes across the back office, allowing funds to scale efficiently.

They help managers meet their objectives by helping prepare for forthcoming challenges before problems emerge, allowing them to contribute to strategic plans. In addition, global service providers help managers with resourcing issues and provide local expertise in multiple jurisdictions.

In essence, co-sourcing partners align with their clients in terms of systems, processes, and culture. They become the source to support a wide array of requirements. As private capital enters a new era of scrutiny and success, this co-sourcing model is a natural development of the client and service provider relationship.


CSC provides tailored administration and strategic outsourcing solutions to support the complex operations of alternative asset managers across jurisdictions and asset types while adhering to global regulations and compliance. A market leader, we work with funds of all sizes, from start-ups to the largest and most experienced fund managers in the world. Founded in 1899, CSC prides itself on being privately held and professionally managed for more than 120 years. We are the trusted partner of choice for more than 90% of the Fortune 500® and more than 70% of the PEI 300. CSC has office locations and capabilities in more than 140 jurisdictions across Europe, the Americas, Asia Pacific, and the Middle East. We are a global company capable of doing business wherever our clients are—and we accomplish that by employing experts in every business we serve. We are the business behind business®. Learn more at

This document is provided by Intertrust Group, a CSC company for information purposes only and does not constitute an offer, invitation or inducement to contract. The information herein does not constitute legal, tax, regulatory, accounting or other professional advice and therefore one should seek appropriate professional advice before considering a transaction as described in this document. No liability is accepted whatsoever for any direct or consequential loss arising from the use of this document.