India’s IT outsourcing firms are betting on US President Barack Obama’s healthcare reform to rev up revenue growth which is slowing as the $146 billion industry’s key financial and manufacturing clients spend less on software services.
How Obamacare Could Help Firms Like TCS,Wipro And Infy :
The United States is the biggest market for the outsourcing industry, which is dominated by Tata Consultancy Services, Infosys Ltd and Wipro Ltd.
It also accounts for 90 per cent of all healthcare related contracts, which researchers Everest Group expect to more than double to about $68 billion in 2020 from nearly $31 billion two years ago, largely due to “Obamacare”.
“In terms of technology maturity, other sectors like manufacturing, banking, are a lot more mature than healthcare,” said Rajib Bhattacharya, head of a healthcare software unit that India’s fifth largest outsourcing firm Tech Mahindra set up last month.
Average revenue growth for India’s top five outsourcing firms by market value is expected to slow to 13.3 per cent year-on-year in the quarter that ended June 30 from 18.6 per cent growth in the same year-ago period, Thomson Reuters data shows.
The slowdown is largely due to banks, manufacturers and financial firms cutting down on IT spending amid uncertain prospects for the global economy.
By contrast, US states have to upgrade healthcare programs and build online exchanges where buyers can evaluate and select service providers under Obamacare, creating outsourcing opportunities worth hundreds of millions of dollars.
Researchers Gartner estimate global IT spending will this year fall 5.5 per cent from a year ago to $3.5 trillion, which means competition for booming sectors like healthcare will be fierce.