The Hindu Business Line : Healthcare unaffected by US meltdown

Bangalore, Sept. 25 The economic downturn is unlikely to impact IT budgets in healthcare industry as service providers continue to invest in new technologies to meet the growing demand for healthcare services and keep costs under control.

The US credit crisis has impacted IT spending in key verticals such as banking, financial services and insurance, retail and manufacturing, where customers have delayed or postponed their investments on deploying new technology applications.

“It (US economic crisis) is not affecting us in any form,” said Mr Gary Cohen, Executive Chairman and CEO of iSoft, an IBA Health Group Company. iSoft earns a bulk of its revenues from the public sector in the UK, US, Australia, Spain, Germany and Italy — where healthcare is a focus area for governments.

iSoft stands to benefit from the rising spends on healthcare in developed countries that stands around 9-12 per cent of the GDP, Mr Cohen said.

iSoft, which opened a new development centre in Bangalore on Thursday, plans to increase its 400-people global product development team in India by a fifth next year. The company has some 1,800 employees in India, including the support staff, based in Chennai and Bangalore.

A recent survey by market analyst Datamonitor revealed that healthcare industry would significantly increase IT spending in 2009 as growing demand for healthcare services from the aging ‘baby boom’ generation in the Western Europe, the US and Japan, leads to rising costs for national and private health systems in these countries.

Growth slower: CTS

However, Cognizant Technology Solutions Corp, which has the largest exposure to healthcare among large Indian IT services firms, saw a three per cent sequential growth in June as compared to 10 per cent in the March quarter.

“Spending amongst our life sciences customers was weak as they pulled back plans for discretionary spending due to the economic environment and pressure resulting from drug safety, government, and regulatory issues,” Mr Francisco D’Souza, President and CEO said.

TCS earns about 5 per cent of its revenues from healthcare, while Satyam derives 7 per cent.

Early this week Satyam Computers partnered with Oracle’s new Health Sciences Global Business Unit to provide ‘Clinical xPress’, the clinical development and safety applications. “With Clinical xPress, we can enable pharmaceutical, biotech, contract research organisations and medical device companies to optimize costs and accelerate drug development,” said Mr Kishore Rachapudi, Global Head, Satyam Life Sciences, in a press release.

Indian IT vendors earn a small portion of their revenues from healthcare and life-science and are increasing their exposure to these verticals. TCS earns about 5 per cent of its revenues from healthcare, while Satyam derives 7 per cent.

Early this week Satyam Computers partnered with Oracle’s new Health Sciences Global Business Unit to provide ‘Clinical xPress’, the clinical development and safety applications.

“With Clinical xPress, we can enable pharmaceutical, biotech, contract research organisations and medical device companies to optimize costs and accelerate drug development,” said Mr Kishore Rachapudi, Global Head, Satyam Life Sciences, in a press release.

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