More middle office outsourcing uptake expected

Half of Asian pension funds and investment managers outsource or have considered outsourcing some middle office functions in the past five years, according to a Northern Trust survey.

Over a third of the funds and investment managers who attended Northern Trust’s advisory seminar held in Hong Kong last month said they had implemented an outsourcing project within the same period.

Northern Trust head of global fund services for Asia, Caroline Higgins, said: “With evolving regulatory requirements, a low-yield environment and continuing pressure on pricing and cost structures, both asset owners and asset managers are facing considerable challenges and increasing complexity in the market”.

“Some institutional investors have found value in middle office outsourcing, which allows them to leverage the expertise of global providers, such as Northern Trust, with capabilities and servicing hubs in Asia. We expect to see more uptake of middle office outsourcing in the region as institutional investors increasingly see the solution’s benefits,” she said.

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The survey found 58 per cent of respondents thought that perceptions of the service provider’s IT infrastructure was the most important driver in outsourcing decisions.

Cost considerations was the most important driver for 25 per cent, and a provider’s scale for 17 percent.

“This survey underlines that middle office outsourcing can offer sophisticated analytics, more accessible and up-to-date data, as well as keep pace with market, regulatory and technological developments,” Higgins said.