The $12.4-billion Indian business process outsourcing sector is on an overdrive to beef up its manpower presence in the US, to cash in on the opportunity after the recently enacted US healthcare bill. Known popularly as ObamaCare, the US Patient Protection and Affordable Care Act promises, among other things, to extend health insurance cover to 32 million more Americans.
In the two months since the law came into force, several Indian BPOs like Genpact, Aegis and Avantha have sewn up partnerships and acquisitions to tap the billions that will be spent to overhaul the US health IT infrastructure towards actualising one of Obama administration?s biggest reforms yet.
On Tuesday, MajescoMastek, the US subsidiary of Mumbai-based IT solutions firm Mastek, formed an alliance with Genpact, the country’s largest BPO, to cater to clients in insurance, government and financial services in the US. Sudhakar Ram, CMD, Mastek, says: ?We expect a number of transformational deals in the next quarter. We expect it in the insurance and government sector in the US.?
Privacy of personal health data, political sensitivities and the need for onshore patient care have prompted Indian firms to blend American workforce which knows the local business context with an Indian one. Currently, out of the 8 lakh-odd BPO workers in the country, 97-98% work from India.
Nasscom has predicted 18-20% growth for the Indian BPO sector and the healthcare vertical is expected to take the lead. Last year, healthcare contributed 3% to Indian BPOs? offshore export revenue, but in the backdrop of ObamaCare, growth in emerging verticals like healthcare is expected to be four times faster than in core verticals.
Last week, Avantha Group acquired Florida-based Pyramid Healthcare Solutions in a deal worth $20 million (Rs 92.54 crore). Avantha Group CMD Gautam Thapar said: ?This acquisition will strengthen our global presence in the niche healthcare solutions sector.?
Bullish on the health insurance vertical, Patni Computer Systems has taken on board 300 employees of health insurer CHCS Services, a subsidiary of Universal American Corporation. The move came after Patni bagged a $200-million IT deal with UAM in the US. Patni senior vice-president & global head (BPO) Sanjiv Kapur says: ?Patni has decided to invest in the client geography. We want to be seen as a player creating jobs and employment onshore. As part of the recent acquisition, we will serve Universal American Corporation and third party clients, as well as different insurance companies.? The BPO sector, he says, was earlier a 99% offshore job, but now, with the nature of the business transforming ? it is 75% India and 25% in the US. Patni now has an underwriting shop and a nursing network in the US, apart from a back office in India.
Aegis, a BPO from the diversified Essar Group, has increased its onshore presence by 25% for its healthcare vertical. The company has a total of 5,000 employees onshore. Says Aparoop Sengupta, MD & Global CEO: ?Having presence onshore is not a fancy but a necessity. Though we have onshore presence across all verticals, healthcare is the prominent one and we are currently increasing jobs in the US. The philosophy that we are an Indian company and all jobs have to come to India has to change.?
Aegis recently acquired US-based Sallie Mae, a leading education finance service provider. It has also acquired its customer service center in Killeen, Texas. Around 350 Sallie Mae employees would be transferred to Aegis.
Many IT players have successfully employed a mixed-shore model over the years, with the development team located offshore while the core delivery team responsible for client interface is positioned onsite. ?With the significant opportunities now available for onsite BPO operations, these IT-BPO vendors are better equipped and one step ahead of pure BPO vendors due to their presence and experience in operating the mixed-shore model,? says Saugata Sengupta, Senior Analyst, Tholons Advisory Firm.
Ashutosh Vaidya, head, Wipro BPO believes that onshore presence is more prominent in the healthcare vertical considering the situation, though it also exists in other industries. ?As enrollment of health insurance subscribers goes up, sourcing too will go up. There will be demand for people both in the US and the country which is providing services (India),? he predicts. Data privacy issues and government regulations in client geographies are responsible for expanding onshore in the healthcare vertical, he adds.
India?s second-largest IT exporter Infosys has an onshore delivery centre at Atlanta in Georgia with about 250 resources in various BPO and IT services related to insurance processing. Says Amit Kothiyal, Head, Emerging Markets, Infosys BPO: ?We are looking at building additional capability in the US to compete for federal and state healthcare businesses and will leverage the Atlanta centre.?
He adds that on the IT side, Infosys does offer IT services to a large national health insurance firm onsite with over 1,000 consultants. Availability of resources with relevant capabilities to meet process requirements? such as registered nurses for telemedicine support services for a disease management programme ? is one of the reasons for Infosys BPO to concentrate on its onshore presence.
Sid Pai, managing director, global sourcing advisory firm TPI concludes: ?Healthcare sector might just show a way for the mixed-shore model, but it will stretch through other sectors as well, be it telecom or finance.?