Middle-Office and Back-Office Outsourcing: Successful Lift Outs or Co-sourcing Arrangements Hold Promise for Japanese Asset Management Firms
By Nomura Research Institute and BNY Mellon Asset Servicing
As asset management firms spanning the globe continue to sharpen their focus on improving efficiency and turning fixed operational costs into variable costs, outsourcing back-office and middle-office functions remains an area of opportunity. However, not all asset management firms embrace the spectrum of outsourcing arrangements, particularly because these arrangements may be affected by traditional employment models. While US and European asset managers have the flexibility to select the outsourcing arrangement that best aligns with the firms’ objectives, asset managers in Japan are often challenged by a long-standing labor tradition of the “lifetime employment” model. In this paper the Nomura Research Institute and BNY Mellon discuss global and Japanese outsourcing trends, the labor tradition challenges that outsourcing providers face in Japan, co-sourcing as a potential outsourcing model, and a successful “lift out” at an asset management firm, which demonstrates how providers can overcome these challenges when working with Japanese asset management firms.