Middle Office Outsourcing Market Analysis North America, Europe, APAC, South America, Middle East and Africa - US, Japan, Australia, UK, France - Size and Forecast 2024-2028

Middle Office Outsourcing Market 2024-2028 :

The middle office outsourcing market size is estimated to grow at a CAGR of 9.3% between 2023 and 2028. The market size is forecast to increase by USD 3.67 billion. The growth of the market depends on several factors, such as the need for new technologies and budget constraints, the need to comply with regulatory standards, and growing market pressures. Middle office outsourcing refers to the package of traditional middle-office functions, such as trade processing, reconciliations, corporate actions, and investment accounting, with new data aggregation, storage, and analytics services. These middle-office operations are outsourced for competitive advantages. Middle office outsourcing services involve different stakeholders, such as custodians, brokers, and other third parties. With the increasing technological innovations, enterprises across various industry verticals are trying to leverage technologies such as artificial intelligence (AI), machine learning (ML), and blockchain; however, they often face difficulties with legacy systems. Thus, middle office outsourcing services enable these enterprises to overcome such challenges.

This middle office outsourcing market report extensively covers market segmentation by end-user (investment banking and management, broker-dealers, stock exchange, and others), deployment (on-premises and cloud), and geography (North America, Europe, APAC, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2018 - 2022.

What will be the Size of the Middle Office Outsourcing Market During the Forecast Period?

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Middle Office Outsourcing Market Overview

 Driver

The need for new technologies and budget constraints is notably driving the market growth. With the growing complexity of operations, increasing customer base, and strong competition, financial institutions are trying to leverage the benefits of technological innovations to enhance their operations. Furthermore, they are trying to draw actionable insights from the data sets available to make crucial decisions. However, most financial institutions have traditional IT infrastructure, which poses a challenge for the implementation of new applications. This requires significant time, effort, and capital to evaluate the current infrastructure, select the right infrastructure for an upgrade, and implement the transformation.

In addition, blockchain solutions are being deployed on a trial basis in segments such as collateral management and reconciliation. AI and ML are useful to address exceptions, optimize processes, and increase output. The trend is expected to continue during the forecast period, owing to vendors' willingness to integrate new technologies in their outsourcing services and the emergence of technological innovations such as AI. These factors will propel the growth of the global middle office outsourcing market during the forecast period.

Trends

Growing security concerns and focus on cybersecurity is an emerging trend shaping the market growth. With increasing security threats in the cyber landscape, the need for advanced cybersecurity is critical in the global middle office outsourcing market. With the growing number of third-party companies, the middle office is vulnerable to many types of cyber-attacks, including ransomware, spoofing, and phishing. Several key components of the middle office, which can be vulnerable to cybercriminals, include data and systems related to commercial files, locations, data analytics, and customer accounts. Valuable middle-office assets, including policies, organizational information, and intellectual property, are at risk in the event of a security breach.

Further, the global middle office outsourcing market is expected to witness growth during the forecast period as financial institutions focus on solving security issues by opting for safe, highly controlled processes, a safety-focused approach, and automation in middle office outsourcing services. Vendors in the global middle office outsourcing market are ensuring safety mechanisms in their services, and this trend will continue during the forecast period. These factors will drive the growth of the global middle office outsourcing market during the forecast period.

Restrain

Implementation delays in outsourcing are a significant challenge hindering the market growth. A significant delay in the implementation of outsourcing models for middle office services is one of the primary concerns for financial institutions. Some of the reasons that can lead to delays are disruptions in business as usual (BAU), downsizing of staff, inaccurate defining of the scope of business requirements, and the lack of consolidation of systems. Hence, many asset managers are rethinking their decisions to adopt outsourcing models owing to the complexities involved. Even though outsourcing services are designed to address the challenges faced by the middle office, any failure to establish service-level agreements properly with vendors could often lead to difficulties for financial institutions. Issues such as a delay in sending responses to regulators and resolving collateral disputes could potentially create problems for financial institutions. 

Furthermore, asset managers must vet the ability of the vendor to offer tailored solutions per the needs of the organizations that are availing of the middle office outsourcing services. Therefore, asset managers need to strictly follow a systematic approach to implementing middle office outsourcing models. Any failure can result in delays for extended durations (sometimes it may even take up to three years), which remains a primary concern for financial institutions. Thus, delays in the implementation of outsourcing models can be a major drawback for the global middle office outsourcing market during the forecast period.

Middle Office Outsourcing Market Segmentation By End-user Segment

The market share growth by the investment banking and management segment will be significant during the forecast period. Most of the outsourcing occurs in investment banking and management. It includes entities such as borrowers, peer-to-peer (P2P) lending platforms, and investors in the market. The responsibilities of middle office outsourcing services in investment banking and management include structuring fees and offering low investment costs to investors. 

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The investment banking and management segment was the largest and was valued at USD 1.75 billion in 2018. Companies in the global middle office outsourcing market are continuously working on offering enhanced services to buyers. For instance, CACEIS offers comprehensive middle office outsourcing services. Some of the key features of CACEIS's middle office outsourcing services include full trade management, independent portfolio record keeping, and daily reconciliations with depositaries and fund administrators. Furthermore, CACEIS production centers are available across the world, ensuring geographical presence. Also, the service is available to all types of investor managers, including entrepreneurial management companies, average-size and large management companies, and institutions managing their own portfolios. Therefore, owing to all these factors, the investment banking and management segment is expected to witness significant growth during the forecast period.

Middle Office Outsourcing Market Segmentation By Deployment Segment 

One key advantage of on-premises middle office outsourcing solutions is the greater control and security on-premises middle office outsourcing solutions offered to organizations. With the on-premises deployment model, businesses have full ownership and control over their systems and data. On-premises middle office outsourcing solutions offer enhanced performance and reliability. Since these systems are installed within the organization's own infrastructure, they can benefit from faster data processing, reduced latency, and increased uptime. This is particularly advantageous for businesses that operate in environments with limited Internet connectivity or latency-sensitive processes. For example, in industries such as logistics and supply chain management, where real-time data processing and coordination are critical, on-premises middle office outsourcing solutions can ensure uninterrupted operations and quicker decision-making. Such factors are expected to increase the demand for on-premises middle office outsourcing solutions, which will propel the growth of the on-premises segment of the market during the forecast period.

Regional Overview

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North America is estimated to contribute 43% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. North America is expected to hold the largest share in the global middle office outsourcing market in focus during the forecast period due to the presence of a booming financial sector in this region and the increasing adoption of innovative technologies by various financial institutes. With abundant data flowing across the world, data management has become one of the key challenges for financial institutions in developed regions such as North America. AI and ML are expected to play a crucial role in analyzing these huge volumes of data sets for actionable insights, especially in the area of risk management. Furthermore, with the advent of technological innovations, financial technology companies are expected to play a key role in the financial services sector.

In addition, the advent of new technologies such as AI and ML and their respective use cases are expected to drive the demand for technological innovations in the middle office outsourcing market in North America. Also, the efforts of vendors to enhance their services, government initiatives to strengthen financial services, and mounting data volumes with regulatory reporting requirements will be some of the key factors that will drive the middle office outsourcing market in North America during the forecast period.

In 2020, the COVID-19 pandemic severely impacted the economic conditions of many countries in the region. However, in 2021, with the initiation of large-scale COVID-19 vaccination drives and the lifting of the COVID-19-induced lockdowns, end-user industries in North America that use middle office outsourcing services, such as energy and utilities, manufacturing, telecom, and retail resumed their operations and witnessed gradual recovery and growth. Thus, owing to the increased demand for middle office outsourcing services from end-user industries the regional middle office outsourcing market is expected to grow in North America during the forecast period.

Middle Office Outsourcing Market Customer Landscape

The Middle Office Outsourcing Market report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.

Global Middle Office Outsourcing Market Customer Landscape

Who are the Major Middle Office Outsourcing Market Companies?

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

Accenture Plc - The company offers middle office outsourcing solutions such as smart time management.

Apex Group Ltd. - The company offers middle office outsourcing by providing side organizations such as asset managers, hedge funds, family offices, pension funds and allocators, as well as brokers or dealers.

BNP Paribas SA - The company offers middle office outsourcing for banks and brokers, which is cost-effective and maximum operational efficiency.

The research report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:

• Brown Brothers Harriman and Co.
• Citigroup Inc.
• Credit Agricole SA
• Empaxis Data Management Inc.
• HedgeGuard
• Hexaware Technologies Ltd.
• Indus Valley Partners
• JPMorgan Chase and Co.
• Linedata Services S.A.
• Northern Trust Corp.
• Royal Bank of Canada
• SEI investment Co.
• Societe Generale SA
• SS and C Technologies Holdings Inc.
• State Street Corp.
• The Bank of New York Mellon Corp.
• WNS Holdings Ltd.

Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

Segment Overview

The middle office outsourcing market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 - 2022.

• End-user Outlook
  • Investment banking and management
  • Broker-dealers
  • Stock exchange
  • Others

• Deployment Outlook
  • On-premises
  • Cloud

• Region Outlook
  • North America
    • The U.S.
    • Canada
  • South America
    • Chile
    • Brazil
    • Argentina 
  • Europe
    • The U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa

Middle Office Outsourcing Market Scope
Report Coverage	Details
Page number	174
Base year	2023
Historic period	2018 - 2022
Forecast period	2024-2028
Growth momentum & CAGR	Accelerate at a CAGR of 9.3%
Market Growth 2024-2028	USD 3,670.91 million
Market structure	Fragmented
YoY growth 2023-2024(%)	8.93
Regional analysis	North America, Europe, APAC, South America, and Middle East and Africa
Performing market contribution	North America at 43%
Key countries	US, Japan, Australia, UK, and France
Competitive landscape	Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks
Key companies profiled	Accenture Plc, Apex Group Ltd., BNP Paribas SA, Brown Brothers Harriman and Co., Citigroup Inc., Credit Agricole SA, Empaxis Data Management Inc., HedgeGuard, Hexaware Technologies Ltd., Indus Valley Partners, JPMorgan Chase and Co., Linedata Services S.A., Northern Trust Corp., Royal Bank of Canada, SEI investment Co., Societe Generale SA, SS and C Technologies Holdings Inc., State Street Corp., The Bank of New York Mellon Corp., and WNS Holdings Ltd.
Market dynamics	Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period.
Customization purview	If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized.

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What are the Key Data Covered in this Middle Office Outsourcing Market Research Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the growth of the market between 2024 and 2028
• Precise estimation of the market  size and its contribution of the market in focus to the parent market
• Accurate predictions about upcoming trends and changes in consumer behavior
• Growth of the market across North America, Europe, APAC, South America, and Middle East and Africa
• A thorough analysis of the market’s competitive landscape and detailed information about companies
• Comprehensive analysis of factors that will challenge the growth of market companies

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