As artificial intelligence takes over functions once handled by offshore teams, asset managers and their services firms face a new frontier, one that blends automation gains with urgent ESG questions.
What began as a cost-driven outsourcing wave to India and Southeast Asia is now being redefined by algorithms, large language models, and robotic process automation. For asset managers embracing these technologies, the challenge is no longer just operational—it’s ethical.
The social consequences of AI adoption are real, and integrating them into ESG frameworks is no longer optional.
From offshore to AI
Over the past two decades, major service providers, especially large American corporations, extensively outsourced administrative tasks to lower-cost regions such as India, the Philippines, and Malaysia. This approach significantly cut costs and created thriving employment hubs globally.
Today, artificial intelligence is reshaping this outsourcing model, rapidly impacting both traditional and alternative asset managers. While I speak from experience within the fund industry, the implications of this transformation extend far beyond asset management into numerous other sectors.
AI as the new outsourcing standard
Merging AI technologies, including large language models, machine learning, and robotic process automation, also known as RPA, increasingly handle repetitive administrative tasks previously outsourced offshore. In fund administration alone, activities like regulatory reporting, investor communications, data reconciliation, and transaction processing are prime candidates for automation.
AI’s growing role is not just beneficial but essential. It delivers unprecedented improvements in speed, accuracy, regulatory compliance, and operational efficiency. Companies adopting AI early gain a clear competitive advantage, a trend equally relevant to asset managers, investment firms, and businesses across many industries.
A need to recognize the social impact
However, AI’s rapid deployment brings significant social consequences. Thousands employed in traditional outsourcing hubs face displacement as tasks migrate from human to automated processes. Job losses, economic uncertainty, and community disruptions emerge as immediate, tangible impacts of this technological shift.
As industries, fund management included, publicly commit to Environmental, Social, and Governance (ESG) criteria, they must thoughtfully consider the often-neglected social dimension. Managing the societal implications of AI adoption is increasingly central to authentic ESG commitments.
Balancing innovation with responsibility
Highlighting social impacts does not imply limiting innovation or slowing AI’s progress. Instead, responsible adoption demands proactive measures, including investments in employee retraining, reskilling initiatives, and transparent communication about transition plans.
Firms demonstrating leadership in AI adoption alongside robust social strategies will differentiate themselves positively. This approach is both ethically responsible and strategically advantageous.
Call for thoughtful action
Though my perspective originates from within the fund industry, the issues described resonate across multiple sectors experiencing similar transformations. Leaders across all industries must thoughtfully navigate AI’s adoption, balancing innovation, efficiency, and genuine social responsibility.
The future will reward those who actively shape this evolution, ensuring technological progress serves both business objectives and broader societal goals.
Christophe Santer is a columnist for Investment Officer Luxembourg. A Luxembourg native, Santer has nearly two decades of experience in fund administration, investor services, and private markets. He also works as director of business development manager at bunch.