Information Technology (IT) has been helping various industries in a big way in terms of increasing their efficiencies (operational as well as financial) and effectiveness. At the same time, software industry also got benefited in the whole process. Industries such as Banking, Financial Services and Insurance (BFSI), Energy and Utilities, Manufacturing etc have been on the radar of most of IT firms for quite some time, especially the BFSI space. At different points of time, all were like a sunrise industry for the software sector. They are still generating a large part of revenues for the IT industry. The IT industry has sort of concentrated more on the banking industry that has helped the industry grow at a fast clip. However, now-a-days the Indian IT industry has a new customer segment to focus and everyone wants a pie of it. Many IT firms have already started putting more focus on this industry. This new sunrise industry, holding a lot of opportunities going forward, is healthcare.The healthcare segment is not exactly new for the IT industry. The larger companies already have exposure to the segment. IT majors like Wipro and TCS have revenue contribution of 11% and 6% respectively from the healthcare space. The Nasdaq-listed Cognizant draws even greater contribution from this industry. However, Infosys, the country's second largest IT company is lagging behind. Currently healthcare contributes to only 1% of the company's total revenues.
These days nearly all the countries are focusing on healthcare. The huge healthcare budgets announced by the developed world have made this segment more lucrative for the IT companies. Therefore it is little wonder that most companies have started to highlight the healthcare segment as the next big driver for future growth. Looking at the emerging opportunities in the healthcare space, Infosys is eyeing to buy Thomson Reuters Corp. (TRI)'s health-care business and is the frontrunner for the same.
Due to increased focus on healthcare by all the governments across geographies, indeed healthcare space may turn out to be the new BFSI for the IT industry. This would not only help IT firms grow but also diversify their business to mitigate the revenue concentration risk. The companies need to pull up their socks and enter the space aggressively. Else they would very well miss out on the opportunity.
As reported in: http://www.equitymaster.com/tm/tm.asp?date=9/16/2011&title=Healthcare:-A-new-favourite-of-software-firms