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Healthcare BPO sector in India facing competition from U.S. and Philippines

Players engaged in business process outsourcing (BPO) in healthcare sector in India are facing stiff competition from their Filipino counterparts, according to a recent joint study.

2015-10-19 16:42:53

“The Philippines and other low-cost locations are emerging as a big challenge to Indian BPO industry including the healthcare vertical,” pointed out the study —Medical Process Outsourcing in India — jointly conducted by The Associated Chambers of Commerce and Industry of India (Assocham) and global professional services organisation EY.

“Competition from leading healthcare BPO companies in the U.S. is a big challenge for Indian vendors, since most of them are specialists in the healthcare sector and provide an increased gamut of services as compared to Indian vendors,” the study highlighted.
Outlining the various growth inhibitors in healthcare BPO market in India, it said, “Data privacy is the most critical challenge in outsourcing healthcare processes since personal healthcare information is as private as financial information.”

Hence, to provide outsourcing services to overseas vendors, the Indian vendors need to comply with international standards of security and privacy, since this can result in business being attracted or lost.

Another challenge in this industry is the fact that global/local service providers with IT and BPO capabilities and with the capability to provide integrated solutions, with big data/analytics capabilities and high investment in this area are likely to have an advantage over pure-play BPO vendors.
Rising salary levels, inflationary pressure on overall cost of infrastructure, fluctuating exchange rates and infrastructural challenges such as power, broadband connectivity are other challenges that the Indian BPO industry is faced with, the study observed.

Although India has grown as a preferred outsourcing destination for healthcare BPO services, several concerns regarding policy framework in terms of tax laws, data privacy laws, intellectual property (IP) protection laws and clinical trial laws exist.

Indian IT-BPO companies face strict and complex tax regime due to controversies on characterisation of income and transfer pricing issues relating to provision of research and development services.
While the government is gradually taking steps to provide more clarity on these laws, the current scenario is adversely impacting the healthcare BPO market in India, the study pointed out.
The most preferred destination for payer and provider outsourcing in India is due to various advantages such as high number of healthcare professionals available at affordable cost, a large patient pool and reduced time and costs for recruitment.

Payer market in India is estimated at $700-900 million with top BPO and IT vendors having presence in this segment. India is estimated to have a considerable share in payer outsourcing market as a destination and is leading destination in this segment along with the U.S. and Philippines.
The U.S. regulatory changes, margin pressure on payers, demand for niche services, demand for new markets, big data/analytics are certain key drivers in the payer market.

While increased regulatory governance of payers as well as control of fraud, waste and abuse together with competition from global software, IT consultants and BPO vendors are key challenges in the payer market.

“Indian BPO vendors have not been able to penetrate European and other developed markets for insurance outsourcing business due to stricter regulatory norms and data privacy laws.”


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