Seven Key Benefits of Outsourced Private Equity IT

Outsourcing managed IT services has become a popular option for many companies, but is especially useful in helping private equity firms with their unique IT challenges. The main benefits to a private equity firm include: 

Cost savings 

One driver for a private equity firm is saving money. Outsourcing IT support offers a cost-saving factor you won't find by hiring an in-house IT team. When you outsource, you avoid recruiting, training, and management costs you would otherwise need if you hired an in-house IT team. 

With outsourced services, costs are more predictable because you are on a contract or a fixed-cost basis. IT services have predictable pricing models if they don't offer contracts or fixed pricing. 

Access to specialists 

The importance of technology in private equity cannot be understated, which is why it's essential to have access to IT specialists. Not only does hiring in-house IT employees cost money, but you might be left with a pool of applicants who don't have the expertise you need.  

Outsourced managed IT services have access to IT specialists who have worked in various industries and bring different software and services expertise to clients. A private equity firm can leverage the skills of outsourced IT professionals instead of relying on in-house staff with limited experience. 

Scalability 

Private equity is changing and evolving. A noticeable trend in the sector is the increasing diversification of geographies and sectors that firms target for investments. As a private equity firm's technology needs change over time, outsourced IT support can help improve scalability by providing the necessary infrastructure and locations to accommodate a growing business. 

Even a sudden surge in demand can make or break a private equity firm. Outsourced IT support helps by deploying resources as quickly as possible wherever and whenever to ensure IT needs are met and operations continue running. 

Efficiency and productivity 

Private equity firms have a lot on their plates. With investing in private companies, buying out public companies, and finding partners, there is little time for IT problems. 

Outsourcing IT mitigates the risk of downtime. You can leave the technological aspects to the professionals and focus your efforts on the core of the business. This increased efficiency and productivity allow investments to reach profitability quicker, benefiting both the private equity firm and its clients. 

24/7 support 

Technology in private equity can fail at any time. Third-party IT support providers offer 24/7 services so that your firm can benefit from assistance whenever it's needed. If your private equity firm works in different time zones, having this constant support is essential. 

Security 

Private equity firms handle a lot of data and transactions. Because of the sensitive information private equity sectors hold, firms are common targets for social engineering and phishing attacks. Without the help of outsourced IT services, your firm might not have the resources to implement strong IT security threat-prevention measures. IT support mitigates the risk of being vulnerable to cyber threats. Not only can professionals help you stop an attack in its tracks, but they can identify an attempt before it succeeds. 

Regulatory compliance 

Private equity firms are subject to many regulatory requirements. To maintain the security and privacy of sensitive data, adhering to these regulations is crucial. But first, you need to understand them. 

These are some of the essential regulatory requirements that private equity firms must follow: 

• General Data Protection Regulation (“GDPR”)
• Payment Card Industry Data Security Standard (“PCI-DSS”)
• Sarbanes-Oxley (“SOX”) Act  
• Adviser's Act and Dodd-Frank Act 

IT specialists who have worked in private equity are familiar with these regulatory requirements and can help firms solidify the chain of trust. Managed IT services play a crucial role in ensuring compliance by conducting thorough audits and evaluations. These tasks will identify areas of non-compliance you might be unaware of. Understanding compliance gaps allows you to quickly establish data security protocols and implement best practices for IT. 

Inflation and changes in micro and macro environments caused a surge in activity in private equity. There are more than 18,000 private equity funds, an almost 60% increase in the last five years. Because the industry is booming it's more important than ever to have strategic and experienced IT specialists in the private equity sector. Contact us below to discuss your firm’s unique challenges and how outsourced IT can support continued growth.