Hedge funds will aggressively make use of “turn-key” outsourcing arrangements to curb costs and streamline operations as the industry attempts to recover from the heavy losses of 2008, a report says.

Turn key outsourcing is a concept where a firm pays for the final output or product without taking on other costs such as staffing. Turnkey outsourcing companies are expected to fit their output with the structure of the hiring company and handle their own administrative matters, payroll for their employees and headquarters.

In a report, Paladyne Systems, a New York-based firm, says outsourcing is the best viable solution to the task of achieving complete operational control in the face of redemptions, cost pressure and lower fees.

The report defines a “turn-key” hosting provider as a combined solution of software, hosting services, and support, and predicts turn-key hosting to be the wave of the future for fund managers, fund administrators, and prime brokers.

There is no need for fund managers or service providers to incur the costs of building complex infrastructure, when lower cost and more comprehensive outsourcing solutions are available in the marketplace.