The middle office outsourcing market was valued at US$ 5,084.1 Mn in 2018; it is estimated to grow at a CAGR of 7.8% to reach US$ 9,894.7 Mn by 2027.

The growing need to improve the overall business efficiency is one of the major factors driving the middle office outsourcing market. To meet the efficiency requirements of an organization, the vendors are currently coming up with innovative services and product offerings. They are also focusing on building strategic planning aligned directly with the operations and functions of the organization. Middle office outsourcing services help in aligning business objectives with management planning, and thus maintains coordination between different activities of the organization. For instance, the costs associated with the traditional banking system can be reduced by outsourcing middle office processes, such as procurement and trade-related operations. Furthermore, to enhance the market share and maintain a competitive edge, players in the market are coming up with new ideas and introducing many new technologies and techniques into the middle office services. Furthermore, predictive asset maintenance introduced is likely to help companies in the reduction of maintenance cost, saving money on scheduled repairs, and eliminating breakdowns if any.

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Middle Office Outsourcing Market: Strategic Insights

Middle Office Outsourcing Market

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  CAGR (2018 - 2027)

  7.8%
• Market Size 2018
  US$ 5.08 Billion
• Market Size 2027
  US$ 9.89 Billion

Market Dynamics

GROWTH DRIVERS

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FUTURE TRENDS

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OPPORTUNITIES

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Key Players

• Adepa Global Services S.A.
• Brown Brothers Harriman
• Caceis
• Hedgeguard
• JPMorgan Chase & Co.
• Northern Trust Corporation
• Societe Generale Securities Services
• SS&C Technologies, Inc.
• State Street Corporation

Regional Overview

• North America
• Europe
• Asia-Pacific
• South and Central America
• Middle East and Africa

Market Segmentation

Offering

• Portfolio Management
• Trade Management
• Others

End-Use

• Investment Banking and Management
• Broker- Dealers
• Stock Exchanges
• Others

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Market Insights

Rise of Automation and Cloud Solutions

The optimization of middle office operations, such as reconciliation reporting and billing, portfolio accounting, staff augmentation, plays a crucial role in financial institutions as outsourcing helps in overcoming issues related to workflow disruption and also safeguards from wrong reporting. Thus, the emergence of automation is among the key trends in the global middle office outsourcing market. It eliminates unnecessary processes, reduces operational risks, provides valuable insights, and cuts down cost. Furthermore, cloud-based solutions, such as the “SaaS middle office model,” are being increasingly adopted for decreasing operational costs. The emergence of cloud solutions and increasing automation are likely to drive the middle office outsourcing market in the coming future. Cloud-based middle office solutions help in enhancing operational flexibility by providing frequent upgrades and enhancements, on-demand scalability, and extensibility as firms launch new and innovative products.

Offering Market Insights

Portfolio management refers to tracking the performance of individual securities in a stock portfolio, and examining the portfolio to ensure that it meets the investor's growth expectations. The portfolio and trading management help High-net-worth (HNW) individuals in handling their financial assets effectively and securely. It also provides real-time data and analytics in making better investment decisions and also helps in enhancing management performance, and optimizing the operational agility. With the increasing competition in the investment management world, various investors are focusing on the associated fixed costs. Investors are also building different business strategies to make  informed decisions relating to outsourcing of non-core aspects of their business, such as Back-Office operations or Middle-Office functions.

End Use Market Insight

Middle office services involve various stakeholders, namely brokers, custodians, and other third-parties. For automating the workflow process and reducing the overall costs/expenses, clients outsource their middle office operations, thereby leading to increased need for middle office outsourcing services. Adding to this, it is difficult for private equity and hedge fund firms to diversify the asset risks and meet the regulatory compliances due to high investments and costs involved. Therefore, they prefer outsourcing it to the third party.

The players operating in the enterprise content management market focus on strategies such as mergers, acquisitions, and market initiatives to maintain their positions in the market. A few developments by key players are listed below:

• In December 2019, CACEIS and S3 would benefit from value creation gaining competitive positioning and benefits from enhanced geographical presence, full coverage of the asset servicing value chain as well as expanded offering to support both existing and new clients in their projects and their development.

• In September 2019, Northern Trust launched a range of new client dashboards for Omnium, its middle- and back-office technology platform for alternative fund administration.

Middle Office Outsourcing Market Report Scope

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Global Middle Office Outsourcing Market Segments:

Middle Office Outsourcing Market – By Offering

• Portfolio Management
• Trade Management
• Others

Middle Office Outsourcing Market – By Component

• Investment Banking and Management
• Broker- Dealers
• Stock Exchanges
• Others

Middle Office Outsourcing Market – By Geography

• North America

  • U.S.
  • Canada
  • Mexico

• Europe

  • France
  • Germany
  • Italy
  • Spain
  • UK
  • Rest of Europe

• Asia Pacific (APAC)

  • Australia
  • China
  • India
  • Japan
  • Rest of APAC

• Middle East & Africa (MEA)

  • Saudi Arabia
  • UAE
  • South Africa
  • Rest of MEA

• South America (SAM)

  • Brazil
  • Rest of SAM

Companies

• Adepa Global Services S.A.
• Brown Brothers Harriman
• CACEIS
• Hedgeguard
• JPMorgan Chase & Co.
• Northern Trust Corporation
• Societe Generale Securities Services
• SS&C Technologies, Inc.
• State Street Corporation
• The Bank of New York Mellon Corporation