The Asian asset management industry has experienced double digit growth for most of the past decade; driven by sustained economic growth, a burgeoning middle class and an increasing need for retirement savings. The future outlook remains positive, despite the current headwinds from the COVID-19 outbreak and geopolitical tensions.
As the market grows, asset managers need to focus on the fundamentals and restructure their operating models in order to accommodate growth and manage costs. This search for efficiency and cost-effectiveness is driving outsourcing of non-core activities globally and more recently, in the region. It has become relatively commonplace to see Asian asset managers outsource back office services such as fund administration. But today, they are looking further up the value chain, setting their sights on the outsourcing of middle office operations.
Middle office outsourcing is still in its infancy in many Asian markets, but it has been growing here as asset managers recognise the benefits in cost, managing risk, easing regulatory burden, and gaining access to up-to-date technologies. Outsourcing providers offer platforms that can scale and manage complexity, and facilitate growth in global markets investments.