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Software: Healthy growth? - Views on News from Equitymaster
 
 
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  • Mar 20, 2002

    Software: Healthy growth?

    For the quarter ended December 2001 Infosys as usual bagged projects from verticals like BFSI and manufacturing. But the most notable was the project that gave Infy an entry into the healthcare sector. The health care sector has one of the lowest penetrations of information technology and consequently, has very strong growth potential.

    The National Health Services (NHS) UK has employed Infosys on a consulting assignment to enable its general practitioners and hospitals to access patient records electronically through a pioneering initiative called ERDIP (Electronic Record Data Implementation Programme). Infosys will provide services like technical coordination, data migration, system integration and system design.

    This could be a big breakthrough for the Indian software industry. Considering the size of the healthcare services markets, vast business opportunities could lie in store. Contribution of private healthcare services to the national output in the US was estimated to be 5.9% in 2000. Therefore, the size of the industry works out to be US$ 547 bn (Rs 26,256 bn). The industry has grown at a CAGR of 5% since in 1997. Considering the fact that the spending on information technology by this industry group has been traditionally lower at 1% to 2% of revenues as compared to 5% in other industries. A significant amount of total spending by the healthcare industry is on administration. The delivery of services is both labour and information intensive. Inefficiency in tracking, organizing, retrieving, evaluating and managing the high volume of healthcare data raises the cost of delivery.

    Aggregation of different services has caused the need for efficient information system to burgeon. Also, there is a need to exchange information between laboratories, pharmacies and clinics. Increasingly there is a growing awareness that by extensive use of information technology, the healthcare industry too can benefit in terms of reduced cost of operations just like other industries in the past.

    Apart from the advantage of reduced costs, healthcare is one sector where access to real time information could help save lives. Therefore, the opportunity for IT to deliver is immense. Rx-Connect, US, is testing software systems that will enable doctors to access patient information through wireless handheld devices. Information technology would not only be able to enable real time access to information, it would also remove the barrier of distance between the doctor and the patient. Using the Internet a patient could seek advise from a doctor located thousands of miles away, with the doctor being able to see the relevant investigations through the Internet. This is known as telemedicine.

    Also, patients could use the Internet to buy medicines just like any other goods. Online pharmacies are likely to be more common in the near future. The systems can access the doctor’s records to verify the authorisation of the prescription.

    Thus, the possibilities are numerous. However, its going to be tough fight for the Indian software industry to capture a share of this market. In 1997 alone there were about 600 IT healthcare companies in the US. However, with maturity in areas like e-commerce and systems integration, the Indian companies are likely to have an edge in a bid to capture the market share.

     

     

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