As part of our research in partnership with Global Custodian to explore the evolving decisions toward outsourcing the middle and back office, we have released our inaugural Asia Pacific (APAC) report discussing regional preferences throughout the region. In a survey of more than 100 respondents in Australia, China, Hong Kong, India, Japan, Malaysia, Singapore, Thailand and Vietnam, our initial finding echoed what we found in the "Outsourcing Middle- and Back-Office Functions: Asia Perspective" global report, which focuses on the US and Europe—that most respondents felt that their outsourcing experiences had met or exceeded their expectations. Survey participants comprised asset managers (85%) and hedge funds (15%).
When asked about the factors behind their reasoning for deciding to outsource, the most common response was greater efficiency (70%), followed by operational expertise (68.5%) and cost (61.9%). At the bottom of the list, location was not a key factor for most respondents. Respondents cited initial cost, internal resistance and loss of control as their primary concerns about outsourcing.
One difference between APAC respondents and our findings in the US and Europe is the rate at which an organization chooses to increase their outsourcing after the initial experience, with APAC respondents being much more likely to outsource additional functions (61.9%) than their US and European counterparts (44.5%).
Our research confirms that the investment industry in APAC is open to adopting a phased outsourcing approach. Usually, an organization starts by outsourcing one specific internal function or process. Then, following a positive outcome, firms seek to expand their use of third-party outsourcing to position themselves for success.
Firms are witnessing swift and positive outcomes from outsourcing, with onshore partners delivering immediate benefits. This outcome has led to a quicker adoption and expansion of outsourcing in the APAC region, where the trend is to increase outsourcing activities. Additionally, the APAC market is characterized by numerous startups and younger investment firms, which facilitates the outsourcing process. These firms, being relatively new to investment management and operations, lack the burden of outdated systems, making outsourcing less about transformation and more about straightforward conversion.
The APAC trend indicates a growing acceptance of outsourcing. To learn more about this paradigm shift, download our "Outsourcing Middle- and Back-Office Functions: Asia Perspective" APAC report.
