The global healthcare industry is under pressure to reduce research and administrative costs and meet tighter compliance and security mandates in Europe and in the US. The market has thus begun to represent an outsourcing opportunity for IT players. The global healthcare IT outsourcing market is estimated at around USD80 billion and is growing by 12 percent every year. Automation in the industry is equally low. As pressure from consumers increases, players will need to outsource an increasing share of their IT budget. With costs six to seven times lower than in the US, Indian IT companies stand to benefit from this opportunity, he said.
As margins remain a concern, most of the pharma companies, health insurance players and health maintenance organisations are looking at alternatives to cut costs and meet the rules mandated by US Food and Drug Administration. Healthcare organisations outsource less than 10 percent of their IT budget, said K Muralikrishna, managing director of Helios and Matheson, a Chennai-based information technology company.
The pharmaceutical and healthcare industries in the US are going through a period of turbulence. The attempt is to replace the traditional blockbuster model of drug development with a new one that enables it to develop safer, more efficacious drugs. There is a huge struggle to cope with rapidly rising costs, inconsistent delivery and inadequate access in many countries.
These pressures have often lead the two industries to work closer, to realise the value of the information they collect and provide better products and services. New technologies could play a major role in enabling this convergence. Common data standards and security-rich systems capable of preserving the confidentiality of personal data will be essential to achieve this, say industry analysts.
To build a strong customer base, Helios and Matheson has completed four acquisitions in the last five years. Last year, it bought a controlling 43 percent stake in The A Consulting Team Inc., NY, USA in an all cash deal at USD8.75 million. The cash deal had an additional earn-out component to the promoter. This acquisition has allowed companies to improve margins by sending out activities to India.
However, most jobs sent out to India are still mainly low-end jobs. Employees in the US were very apprehensive initially as most people believed that India remains that of a poor country. But mentalities are changing, and employees feel that by improving overall margins this could also mean better bonuses for higher end jobs.