<<<<< JOB DESTRUCTION NEWSLETTER  No. 2096 -- 3/27/2010 >>>>>

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.

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. "Universal access to
    insurance increases the risk to insurance providers, forcing them
    to become more efficient by lowering costs," 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.
    Economic Times

    "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.


<<<>>>

Regarding Links: I have received several complaints about long links.
Especially the last one because the USCIS makes irritatingly long links. In
previous newsletters I have explained in detail why that happens in ASCII
based email so I won't cover old ground. The only thing you can do to go
the web page is to copy and paste the link together. The main advantage
of using the web version is that links are point and click. The email
newsletter usually has entire articles for reference and archival purposes.


<<<>>>


Web Verson:
http://blog.vdare.com/archives/2010/03/27/obamacare-a-boon-for-indian-bpos/

India Times video report. 
http://economictimes.indiatimes.com/videoshow/5713141.cms

http://economictimes.indiatimes.com/articleshow/5713526.cms
Opportunity comes knocking on outsourcing firms' doors, 23 Mar 2010, by N
Shivapriya,

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/25/AR2010032501
385.html
Indian firms hope to cash in on U.S. health-care law, March 25, 2010, by
Rama Lakshmi
and
http://www.azcentral.com/business/articles/2010/03/26/20100326india-health-c
are-U.S..html
Indian firms hope to gain from U.S. health law, Mar. 26, 2010, by Rama
Lakshmi

http://www.reuters.com/article/idUSTRE62P37N20100326?type=GCA-HealthcareRe
form
Firstsource sees opportunity in health law, Mar 26, 2010, by Nick
Zieminski, editing by Dave Zimmerman


+++++++++++++++++++++++++++++++++++++++++++++++++++

http://economictimes.indiatimes.com/articleshow/5713526.cms

Opportunity comes knocking on outsourcing firms' doors
23 Mar 2010, 1028 hrs IST, N Shivapriya, ET Bureau

MUMBAI: 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 and far bigger than
the Y2K, which included only changing code, said experts. When the bill
becomes law, it will bring around 32 million more Americans under insurance
cover, pushing healthcare providers and insurance firms to become more
efficient and opening up demand for less-expensive services, better
technology and business intelligence. ( Watch )

"The opportunity is not at a company-level but at an industry level," said
Milan Sheth, partner, Ernst & Young, indicating the scale of opportunities
that is expected to unfold over the next 10 years. Nearly all top IT firms
and BPOs have been anticipating the move and preparing for it by pursuing
contracts and acquisitions giving them a footprint the US healthcare
provider and insurance segment, estimated at around $ 30 billion.

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. "Universal access to insurance increases the risk
to insurance providers, forcing them to become more efficient by lowering
costs," 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.

Mumbai-headquartered IT services provider, Patni Computer Systems,
announced a strategic deal with a US-based healthcare insurance provider
that involved taking over part of its operations in El Paso, US, only last
week. "Patni sees significant healthcare outsourcing opportunity both in IT
and BPO areas. The additional enrollees will need to be administered and
this means a lot more work in areas of claims processing, enrollments,
underwriting support, customer support et al for insurance carriers, which
is outsourced to companies such as Patni," said Sanjiv Kapur, senior VP and
head - BPO, Patni.

"There will be increased volumes both on the provider and payer side. It is
a big positive for us because the big part of what we do is eligibility
services, where we assess eligibility and enrol people into medicare
programmes... I expect a bulk of business to come in 2014," said Ananda
Mukherji, CEO, Firstsource Solutions, which will gain from its MedAssist
acquisition done in 2007. This kind of opportunity will require players to
also have an onshore presence, in some cases, because of regulatory
requirements and in others, because of the high-end processing involved,
said industry executives. A few like Firstsource and Cbay already have an
onshore presence and while others are building it.

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/25/AR2010032501
385.html

Indian firms hope to cash in on U.S. health-care law

By Rama Lakshmi
Washington Post Foreign Service
Thursday, March 25, 2010; 8:04 PM

NEW DELHI -- While the contentious political battle over the new
health-care law continues in the United States, in India the outsourcing
industry is seeing it as a boon for business and is salivating over its
prospects.

Indian companies are working with U.S. insurers handling back-office
operations, including claims processing, supply management and
transcription services. The extension of health care to 32 million
Americans over the next decade will mean that the need for those services
will grow, executives here said.

"The health-care reform bill is a very, very big opportunity for us," said
Ananda Mukerji, managing director of Firstsource Solutions. He said about
40 percent of the company's business comes from dozens of U.S. hospitals
and insurance companies.

"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," he said.

The new law requires some insurance companies to devote more of the
premiums they receive to direct health care and away from administrative
costs.

"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."

India's outsourcing industry was shaken last year when President Obama
declared that he wanted to change "a tax code that says you should pay
lower taxes if you a create job in Bangalore, India, than if you create one
in Buffalo, New York."

It has responded with new efforts to reach out to U.S. workers.

In anticipation of the health-care law, many Indian companies are
establishing a toehold in the United States by negotiating mergers and
acquisitions in recent months.

This month, Patni Computer Systems, India's sixth-largest IT firm, set up
an office in El Paso after a multimillion-dollar deal with a U.S.
health-care company.

"We plan to use El Paso as a major hub to deliver health-care services that
are required by regulators to keep sensitive data-processing operations
onshore," Sanjiv Kapur, head of Patni Business Process Outsourcing, said by
e-mail.

Instead of "offshoring" work, Mukerji, of Firstsource Solutions, calls it
"right-shoring," combining employees in India and the United States. He
said his company employs 2,000 Americans.

"President Obama made that famous statement about outsourcing of jobs last
year," Mukerji said. "Today, I would like to say to him that we have
created jobs in both Buffalo and Bangalore."


+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.reuters.com/article/idUSTRE62P37N20100326?type=GCA-HealthcareRe
form

Firstsource sees opportunity in health law
Fri, Mar 26 2010

By Nick Zieminski

NEW YORK (Reuters) - The U.S. health reform signed into law this week
presents a "big opportunity" for back office services providers such as
India's Firstsource Solutions Ltd <FISO.BO>, Firstsource's chief executive
said on Friday.

Although a ramp-up in its healthcare business is likely to take years, not
months, the company expects more demand from its hospital customers for
services such as Medicaid eligibility processing, and from private
insurers, whose margins will be squeezed by the new law.

"There should be a lot more people being brought under healthcare
coverage," CEO Ananda Mukerji said in an interview. "There will be more
consumption of healthcare services. We should see volumes increase."

Mukerji said the law's expansion of Medicaid eligibility, which lifts the
income threshold for the U.S. government health insurance program for
low-income Americans, presents a "big opportunity" for the company.

"All the services linked to Medicaid like patient outreach, enrollment,
eligibility, processing, stuff we already do. That will give rise to more
work for us, whether from hospital customers or payer customers (private
insurers)."

INSURERS' MARGINS SQUEEZED

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.

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.

Almost 40 percent of Firstsource revenue comes from the healthcare market,
in which the company is ranked No. 2 behind Dell Perot Systems <DELL.O>,
according to healthcare research firm KLAS. The segment's proportion of
revenues is likely to grow in coming years, the CEO said.

Firstsource employs about 2,000 people in the United States in its health
business, handling tasks such as collections and eligibility processing for
hospitals.

Its competitors in the business process outsourcing (BPO) industry include
Genpact Ltd <G.N>, WNS Holdings Ltd <WNS.N>, Cognizant Technology Solutions
Corp <CTSH.O> and ExlService holdings Inc. <EXLS.O>.

Clients will soon start to gear up to comply with the new mandates, but
most measures under the 10-year reform plan will not come into effect until
2013 or 2014, Mukerji said, adding the company would add capacity as needed
to address increased demand as new projects arise.

"I can't recall legislation that has as much impact on our business as
this," Mukerji said. "This is a fundamental change in the way the industry
is structured."

Firstsource shares gained 0.4 percent on the Mumbai market on Friday to
close at 28.95 rupees.

(Reporting by Nick Zieminski, editing by Dave Zimmerman)

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