The Mercenary Technologist

At last week's Buy-Side Technology North American Summit, some hedge fund managers noted that they are now employing vendors to deploy individuals to be embedded inside the hedge fund to help, full-time, with specific projects.
When the project is done, that programmer, developer, technician or general tinkerer goes back to the vendor, or gets moved over to a new project. Either way, he is an outsourced entity for the hedge fund and if anything goes awry, that person is simply released from duty. There aren't any human resource meetings and there aren't any health insurance requirements or promotion issues to be addressed.
Maybe the firm needs a very specific talent set for three months: Thus hiring a full-time employee does not make sense. Outsourcing and near-sourcing options present language barriers and time zone issues, and responses are not as immediate as one an in-house worker could provide.
And a part-time consultant, while an expert, may not have the same skin in the game as someone coming from a vendor firm. The vendor's reputation and future business with that hedge fund are on the line. If that programmer, say, fails to complete his job to the best of his abilities, it's the entire vendor firm that takes the hit, whereas a consultant can simply move on to the next company and exclude that last failure from his resume.
According to a recent study conducted by Greenwich Associates, a Stamford, Connecticut-based consultancy, 44 percent of hedge funds cut their trading desk budgets this year over last, while 40 percent reported flat budgets. (For the purpose of this study, these budgets were a combination of technology spend and trader compensation, but excluded funds allocated to pay trading commissions.)
What that says is that it's not just the back office that is taking a hit when it comes to budgetary needs─even the front office is taking it on the chin. Hedge funds are also working with smaller staffs, both on the trader front and in IT.
As a result, there would seem to be an opportunity for vendors to enter into the mercenary realm and find new and inventive ways to embed their employees inside of hedge funds. These notoriously hands-off firms have come to be all-hands-on-deck after 2008.
This practice of embedding vendor employees inside of a fund has been a common practice when it comes to specific implementations for the vendor: If a hedge fund adds a new order management system, the vendor will add a full-timer to address any issues and make sure the transition from a legacy system to a vendor solution goes smoothly. But those relationships end.
As hedge funds continue to embrace outsourced offerings, it may be worth it for vendors to create mercenary teams inside the company that can bounce around from hedge fund to hedge fund helping with random projects.
If you're firm is already doing something like this, I'd be interested to hear about it. Give me a call (646-490-3973) or shoot me an email.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Trading Tech
WatersTechnology latest edition
Check out our latest edition, plus more than 12 years of our best content.
A new data analytics studio born from a large asset manager hits the market
Amundi Asset Management’s tech arm is commercializing a tool that has 500 users at the buy-side firm.
How exactly does a private-share trading platform work?
As companies stay private for longer, new trading platforms are looking to cash in by helping investors cash out.
Accelerated clearing and settlement, private markets, the future of LSEG’s AIM market, and more
The Waters Cooler: Fitch touts AWS AI for developer productivity, Nasdaq expands tech deal with South American exchanges, National Australia Bank enlists TransFicc, and more in this week’s news roundup.
Inside the company that helped build China’s equity options market
Fintech firm Bachelier Technology on the challenges of creating a trading platform for China’s unique OTC derivatives market.
Experts say HKEX’s plan for T+1 in 2025 is ‘sensible’
The exchange will continue providing core post-trade processing through CCASS but will engage with market participants on the service’s future as HKEX rolls out new OCP features.
‘The opaque juggernaut’: Private credit’s data deficiencies become clear
Investor demand to take advantage of the growing private credit markets is rising, despite limited data, trading mechanisms, and a lack of liquidity.
Overnight trading blocked, consolidated tapes, BlackRock’s Larry Fink, data costs, and more
The Waters Cooler: Deutsche Börse provides crypto custody, FIS has a new GenAI tool, and some M&A activity in this week’s news round-up.