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For India, US health care a sea of opportunity

Outsourcing firms in India brace themselves for onslaught of work following US health care reform.

Up to 41 percent of the money spent on a health plan in the U.S. goes toward administrative costs, according to a recent Deloitte Center for Health Solutions study. Insurance companies will face mandates to spend as much as 90 cents of every dollar on the actual well-being of a client, Mukerji adds, which will "drive increased need for administrative efficiencies, and thus increased demand for outsourcing."

Similarly, the initiative to digitize medical records could be a multibillion-dollar boost to India's high-skilled software developers. "You don't have enough people in the U.S. to put together these solutions and even if you did, it would be too expensive," said Sudhakar Ram, CEO of Mumbai-based IT solutions firm Mastek. He estimates that digitizing medical records will cost between $10 million to $20 million per U.S. hospital, based on his firm's similar work in the U.K. "That's a huge amount of investment. ... I would say it's a significant opportunity for Indian [firms] over a five- to seven-year time frame."

But both political sensitivities on job creation and privacy concerns mean that not all of health care's IT work will be offshored.

"It will not be just Indian IT companies [but] companies over here as well," said Virendra Singh, a director at Moody's who specializes in outsourcing. Several executives at Indian firms said their strategy would be to blend an American workforce that knows the local business context with an Indian one.

Since salaries in the U.S. have increased little in the U.S. during the recession, there is not as large a price differential in hiring an American software engineer and sending an Indian one to a U.S. client site on a skilled worker visa, said Rohit Anand, a Mumbai-based analyst with PINC securities.

The availability of American talent to Indian firms is part of the reason why India's three largest outsourcers have begun setting up shop in the U.S. and employing Americans. In 2008, Bangalore-based Wipro opened a development center in Atlanta that employs 500 people, mostly Americans, and runs a call center for a U.S. health care client. Tata Consultancy Services set up a similar campus with 300 employees near Cincinnati. Infosys is planning a subsidiary in Dallas that will hire locals and seek U.S. government contracts.

Select insurers don't allow their data to leave the U.S., since revealing personal health information can sway a potential employer's or insurer's decision to work with an individual. In the U.K., TV reporters highlighted the risk of sending health data abroad when they went undercover and were able to buy personal health records from a London hospital that had its health records processed in India.

"The level of protection of health data [in the U.S.] is far, far, far below the protection of our financial data in this country," said Deborah Peel, a psychiatrist and founder of Patient Privacy Rights.

But despite the prolonged and highly publicized fight over the reform's cost and benefits, there was little debate over the role India would quietly assume in it.

"The acceptance of the fact that the outsourcing saves money is there," said the analyst Anand. "If government takes the call, they're going to have to [answer] it in a good fashion."