IT firms too rub their hands in glee

Tax holiday makes IT players happy

For the information technology (IT) companies, the five-year tax holiday announced in the Budget is a healthy piece of news.

Branded hospitals use electronic medical records (EMRs) to improve quality and reduce the cost of healthcare delivery.

Thus huge opportunities open up in the areas of customer relationship management (CRM), patient records, supply chain management (SCM), financial and accounting management, infrastructure and security, human capital and payroll management, and regulatory and standards compliance.

The IT Industry may thus get interested in opening up more development centres in tier-2 and tier-3 cities to provide close touch point, say analysts.

"The hospital industry in India is rapidly adopting better technology and are understanding the benefits of outsourcing. In 2006-07, the total IT spend by one hospital was barely 1 per cent. This number has now increased to 6-7 per cent," says Pradeep Kumar Saha, Head IT, Max Healthcare.

IT adoption is generally limited to large, private hospitals in urban areas. Exclusive of staff, IT spending is generally below $8,000 (around Rs 320,000) per hospital in India.

This renders a large and relatively untapped market for the IT industry to focus on. As the IT spend on healthcare is poised to touch $315 million (Rs 1,260 crore) by 2011, IT companies are gearing up to take their share of this pie.

"With these kinds of initiatives by the government plus the learnings and best practices from our experiences will definitely increase the volume of business in this vertical," says Prasad Dindigal, Global Head, Healthcare Business, Satyam.

Satyam currently gets close to 8 per cent of their revenues from the healthcare segment covering payer, provider and life sciences.

HCL Technologies, is also betting big on this segment. "One can expect the propagation of IT usage in general, and the basic financial and workflow improvement applications to be among the first investments by hospitals," says Apurva Chamaria, Strategy Manager, Life Sciences and Healthcare (LSH), HCL.

6 per cent of HCL's revenues comes from its LSH segment with cumulative annual growth rate of 90 per cent.

Last year, HCL partnered with a United States-based clinical diagnostic service provider, Quest Diagnostics, to target India's burgeoning healthcare sector.

"The big opportunity lies in replacement of rudimentary/in-house hospital information system (HIS) applications with second generation, more tightly integrated HIS applications at larger, more sophisticated hospitals. This can be anticipated in the next 3 to 5 years in India," he explains. Adds LSH's Chamaria, "Medical tourism is another key driver for healthcare IT investment in India."