Northern Trust scales up operation in India

Sets up tech hub in India

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Chicago headquartered Northern Trust, a financial services providing investment management and asset servicing solutions with a portfolio of $6.4 trillion assets under custody and $906 billion assets under management, announced the expansion of is technology operations in India. The company set up its second centre and first IT centre of excellence in Pune.

"India has been a great success story for Northern Trust given our global footprint. We needed to have operational centre of excellence that complimented our centres in Dublin and other global centres. And that is how we started in India a decade back in Bangalore. That centre at present has an employee base of 3,800," said Fredrick Waddell, chairman and CEO, Northern Trust.

The Pune centre was to address the de-risking aspect of the firms India foot-print as well as access to talent for IT development and application work. "This centre is IT centre of excellence and not just a business processing centre. We want to build out our IT development capability. Anything that allows our clients to interact with us in more contemporary way?we want to develop those capabilities from here," added Waddell.

He also added that this centre may in future also allow the company to work with Indian IT services players. "I think that's where the other opportunity is, and that is to work closely with Indian IT players on development applications side. We do have relationship with IT players providing contracting services. But as we build out this excellence centre we would look at firms around the world to help us build this," said Waddell.

At present the Pune centre has 200 employees but Mosur Saisekar, senior VP and CEO, Northern Operating Services said they will end this year with 300 people and are looking to touch 500 by the end of next calendar year.

For Northern Trust this expansion though is part of its expansion plans in APAC, this centre will also aid the company's strategy to improve its margins which have been impacted, like other global financial services firms in US, due to regulatory costs, drop in profitability and high interest rates.

Waddell also spoke about the continuing pressure in the financial market and how its impacts Northern Trust. "We are primarily into two segments wealth management and institutional asset management services. Wealthy households in US organically grow at a healthy rate of 6-8 per cent. Global assets segment is a $120 trillion business and by 2019 expected to be $157 trillion. These two markets drive almost 75 per cent of our revenues. Though the market is attractive and we are growing, the problem is profitability. The profitability of this growth is being impacted due to high interest rate regulatory changes and general competitiveness on the asset servicing side as well as wealth management," he added.

One of the reason of improving its profitability growth is to leverage the company global delivery model that allows them to focus on driving efficiencies on infrastructure, focus on cost base of the company to drive bottomline growth. "But this does not come at cost of quality and culture. Our clients are very sophisticated investors and we need employees who can address this segment. That was one of the reasons for us to look at India," added Waddell.

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