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Indian IT in Healthcare Vertical

Indian IT majors have started tapping into the healthcare services vertical, which was hitherto unexplored but going by the adage ‘Better late than never’, it has in recent years emerged among the fastest growing verticals after Banking, Financial Services and Insurance (BFSI).

After the recession, being less affected and therefore more open to IT spends, the healthcare space has grown in importance, but there is no Indian IT company in the top 10 healthcare service providers’ list. While global IT majors like Dell, CSC and Cognizant have over $1 billion revenues coming in from their healthcare IT practices, Infosys in contrast does not even report healthcare revenues, as it is not significantly large. TCS, Wipro and HCL, healthcare in 2010 contributed less than 10% of total revenues, and ranged between $200-500 million.

Now looking to catch up with global players in the $100-billion global healthcare IT market, Wipro recently made a leadership change and is recruiting senior healthcare experts to tap the space and TCS recently announced that it is aggressively looking for healthcare acquisitions in Japan and Germany. Infosys CFO V Balakrishnan says that compared to other verticals, domain expertise in healthcare is vital due to the various regulatory compliances and complex nature of the space and added that the company’s US subsidiary set up in 2010 is building a strong healthcare management team with local talent and is getting closer to potential customers.

Gopi Natarajan, CEO of BPO/KPO firm Omega Healthcare, said that the major healthcare IT outsourcers are insurance firms, pharma companies and service providers like hospitals. He added that the market is highly under penetrated and opportunities are huge as only 2% of total costs in the healthcare sector go towards IT. The new US law seeks to expand healthcare coverage by expanding medical aid eligibility, subsidizing insurance premiums, providing incentives for businesses to provide healthcare benefits, prohibiting denial of coverage and denial of claims based on pre-existing conditions, and establishing health insurance exchanges.

According to Abhishek Shindadkar, IT sector analyst at ICICI Securities, “The US healthcare reform bill will throw up more healthcare IT outsourcing contracts. The country is the biggest outsourcing market for healthcare IT services followed by UK and APAC.”


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