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Obamacare a Boon for Indian BPOs
Obama's national health care program will cause new pressure to reduce costs, and with it more U.S. jobs will be moved to lower cost locales such as India's business process outsourcing (BPO) juggernaut. Indian BPOs anticipate that Obamacare will spur more U.S. dollars to flow to their country, which will in turn create jobs for Indians and increased profits for companies who do the work in India. The optimism of Indian BPOs seems justified considering that huge parts of our healtcare infrastructure have already moved to India.
Several articles have recently been published during the last several days. An India Times article went online on March 23, 2010 and then very similar articles started appearing in the U.S. Two days later one of them was published by the Washington Post. Within days the same article with different titles started popping up in other cities. The origin and proliferation of the story are striking examples that illustrate how our newspapers have also been offshored.
Be sure to watch the India Times video report.
Here are some selected quotes from the articles.
The outsourcing industry received its biggest bonanza yet with the US healthcare bill being passed by the House of Representatives. The opportunity that it throws up for outsourcers is huge.
"Opportunity comes knocking on outsourcing firms' doors", India Economic Times, 23 Mar 2010, by N Shivapriya,
"The health-care-reform bill is a very, very big opportunity for us," said Ananda Mukerji, managing director of Firstsource Solutions. About 40 percent of the company's business comes from dozens of American hospitals and insurance companies, he said. "A big part of what we do for the American companies is eligibility-assessment services, where we assess eligibility of a patient for the Medicare program. We also work with hospitals to submit claims and enroll new patients. With the new bill, all this work will increase."
"Indian firms hope to cash in on U.S. health-care law", March 25, 2010, Washington Post and "Indian firms hope to gain from U.S. health law", Arizona Republic, Mar. 26, 2010, by Rama Lakshmi
A significant amount of business will come from enrollments, claims processing and providing customer services with technology and tools helping insurance providers get more customer insights and price their products appropriately. â€śUniversal access to insurance increases the risk to insurance providers, forcing them to become more efficient by lowering costs,â€ť said Suresh Ramani, COO, Intelenet Global Services, a BPO provider. From no revenues from healthcare providers and payers, Intelenet now gets 10% of its revenues from this segment.
"The health-care . . . law will create a huge pressure on American insurance companies to cut costs," said Rana Mehta, vice president of health care at Technopak, an independent consultancy firm in Gurgaon. "Ultimately it is a business decision to outsource. All this new work has to go somewhere, and India will gain."
WP and AZR
Mukerji said he expected insurance company margins are going to be squeezed as they have to pay new fees and retain sick members with high medical costs. Margins will also be squeezed as the government mandates how much money insurers must spend on medical costs, he said.
"Firstsource sees opportunity in health law", Reuters, Mar 26, 2010, by Nick Zieminski, editing by Dave Zimmerman
Obamacare will mean increased surveillance and data gathering of the U.S. populace. Offshoring to foreign countries is a privacy risk that is rarely discussed but this one from the Reuters report is especially disturbing despite its soft rhetoric:
Hospitals, meanwhile, face more stringent compliance requirements. For example, they will have to take into account factors like the effectiveness of care, which means collecting more data about patients.