Thursday, March 04, 2004

US medical billing major shifting BPO to India

The recent spate of anti-outsourcing outbursts in the US notwithstanding, a US medical billing major is planning to shift bulk of its back office operations to India in a phased manner. Alpha Thought, which already has about 175 live seats operating from NEPZ, Noida hopes to add another 250 people hiring 30 people per month by December 2003. This is expected to go up to 900 seats by the end 2004-05.

Meanwhile, the companys operations in the US would be scaled down to only the front office- liaison with the medical profession and the scanning of documents. Ken Staten, Head of India Operations, stated that the company would incur savings to the tune of over 25 percent by shifting operations to India. Staten stated that his major advantage in having a center in India is the availability of manpower. Not only is the cost lower in India, but we have also found the workforce to be more stable here than in our US operations, he added.

Alpha Thought has five centers in different states in the US and the major issue for the company is finding a stable workforce. Although, the attrition in the ITES sector in India is also very high, it is nothing like the rates in US, assures Staten. He said that the attrition rate for his center which has been in operation for the past two years is negligible because the work is basically data based.

Alpha Thought’s Noida center is in the business of providing billing services to patients on behalf of medical practitioners in the US and then processing and collecting the same on their behalf. Medical billing is a complicated procedure in the US as there is a huge premium in healthcare services, what with the insurance companies having made an aggressive foray into the domain.

Alpha Thought is the second largest billing company in the US after Per-Se Technologies with a turnover of over $40 million. The company also provides billing services to third party users.

Alpha Thought’s strategic move assumes significance in the light of the recent Shirley Turner Bill introduced in the New Jersey State Senate which seeks to ban government outsourcing jobs to places like India. Although the Bill has been put on hold for certain amendments, the Bill has started a trend among other US states. Nasscom and other industry watchers, including the US industry, believe that this is just a flash in the pan and that economic sense would over-rule patriotic feelings.

In the early 80s and the 90s, the US auto industry also had to shift their manufacturing base to cheaper destinations in order to remain competitive. Although there were protests then, it died down eventually as the economic needs prevailed.