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| Indian IT to benefit from Barack Obama's healthcare victory |
| Tuesday, 03 July 2012 | |
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Indian information technology and back-office companies can look forward to deals worth up to USD 22 billion (Rs 1.2 lakh crore) after the US Supreme Court upheld a law designed to bring about far-reaching reforms in the American healthcare sector. Some 30 million uninsured Americans are expected to buy healthcare insurance because of the reform, and new projects are expected in the form of data conversion, creation and management of electronic health records, as well as claims processing and insurance sales. Last week, the US Supreme Court upheld the main elements of the Patient Protection and Affordable Care Act, President Barack Obama signature legislative achievement which he signed into law in 2010. The overhaul has divided America, with the Republican opponents of Obama the ones who most vehemently against it because they believe it infringes on the right of Americans to choose. The law, derisively called Obamacare by its opponents, makes it mandatory for all Americans to buy health coverage starting in 2014 or pay a penalty. Also, employers who fail to offer affordable coverage to full-time staff and their dependents will face penalties. Experts said the decision will potentially unlock about USD 20 billion in outsourcing from the healthcare sector that Indian service providers have been eyeing. According to IT industry group Nasscom, of the USD 70 billion worth of software outsourcing that happens out of India, about USD 30 billion comes from insurance and financial services. Healthcare accounts for another 4 percent of the IT-BPO industry, which is expected to grow slower this year, at 11-14 percent from 17 percent last year. Global leaders in healthcare benefits administration such as ACS-Xerox, Hewitt, Mercer and ADP have set up large outsourcing units in India. America's largest insurer UnitedHealth Group has a captive BPO unit in Gurgaon which employs over 2,000. Others such as ADP and Mercer employ about 6,000 and 2,000, respectively. Most units are based in Gurgaon, from where they administer healthcare benefits for US workers, who can pick and chose benefits in medical insurance. Besides, Infosys, iGate Patni, Cognizant, Genpact, TCS and Wipro, all have insurance practices, which provide underlying technologies to insurance giants. With the new reforms, even single physicians would have to centralize records and convert them into digital format. It will benefit the Indian IT-BPO companies hugely," said Ameet Nivsarkar, vice-president of Nasscom. According to the Everest Group, the global healthcare benefits administration outsourcing market is about USD 5.4 billion in value annually but the potential market is worth USD 20-22 billion, which the healthcare reforms will help unlock. "Although these reforms will take a number of years to come into effect (from 2014), we're seeing buyers looking at outsourcing as an option to understand the reforms, navigate the complexities and identify new savings potential," said Rajesh Ranjan, research director at Everest Research. Sid Pai, partner and MD at TPI, a sourcing advisory, said that the decision of the US Supreme Court will help Indian companies win business in areas such as creation of electronic health records. The new law allocates about USD 37 billion for creation and management of electronic health records, data conversion, beta testing and change management. "Employers will need to double their compliance efforts, especially regarding such immediate requirements as providing summaries of benefits and coverage to their employees," said Julio A Portalatin, President and CEO of Mercer. Globally, Aon Hewitt and Fidelity lead the benefits administration outsourcing market with a combined share of nearly 50 percent. ACS-Xerox, ADP, Ceridian, iGate Patni, Infosys, ING, Mercer, Secova and Towers Watson are the other major providers. "It's likely that outsourcing will become more common as compliance becomes increasingly complex with new healthcare regulations," said Tim Clifford, President, Benefits Services at ADP, a provider of human resource management, payroll and benefits administration services. - The Economic Times |
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