Fifty percent of Asian pension funds and investment managers said their organizations had outsourced or considered outsourcing some middle office functions in the past five years. However, just over a third (38%) had actually implemented an outsourcing project in that period. This is according to attendees of Northern Trust’s advisory seminar for clients, hosted in late May in Hong Kong.

“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,” said Caroline Higgins, head of Global Fund Services for Asia, at Northern Trust. “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.”

The survey revealed that institutional investors’ decisions about outsourcing are most influenced by perceptions of the service provider’s IT infrastructure, with 58% of respondents citing it as the ‘most important driver’ in outsourcing decisions. Cost considerations were top of the list for only a quarter (25%) of those surveyed, and just 17% considered a provider’s scale to be the most important driver.

Commenting on the survey findings, Higgins added: “Northern Trust invests in cutting-edge technologies and we are well-placed to support institutional investors through our robust IT infrastructure. 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.”