Outsourcing of IT Requirements Could Promote All-Round Benefits

As the modern enterprise tries to focus ever more narrowly on its core activities, information technology (IT) outsourcing services are increasingly being considered as a business strategy that provides access to "best in class” processes and cost predictability, according to a recent market report.

In healthcare, IT outsourcing has become increasingly common and provides organizations of all sizes with access to the types of IT systems and expertise that was once only the preserve of the elite. The changing demands and trends in healthcare are forcing healthcare organizations to acknowledge the increasing role that outsourcing can play in improving effectiveness, competitiveness, and IT expertise as well as in reducing business costs.

New analysis from Frost & Sullivan (Palo Alto, CA, USA), an international growth consultancy company, revealed that the market earned revenues of US$710 million in 2008 and is estimated to reach $1,097 million in 2015. The following segments are covered in the research: business process outsourcing, clinical application outsourcing, and infrastructure outsourcing.

"The healthcare IT outsourcing model represents a significant advance in the optimization of healthcare services,” noted Frost & Sullivan program leader Konstantinos Nikolopoulos. "It promotes better and efficient use of hospital resources and, with a wide range of advantages like low up-front capital investment and shorter implementation life-cycles, allows hospitals and healthcare agencies to focus exclusively on their core competencies of providing patient care.”

The service provider manages the complexities of hosting and managing various applications or technologies. Factors including spiraling healthcare costs, the increasing complexity of healthcare IT solutions, and the difficulties of managing them are set to have a major impact on the European outsourcing market for healthcare IT.

One commonly cited reason for not outsourcing enterprise applications or infrastructure is the need for long-term contracts and the fear of commitment. This generally stems from a number of factors including negative coverage pertaining to loss of jobs, quality of work, and the fear of ceding control, together with concerns about the security and location of the provided services.

"High-profile failures [for example, the prominent failures of several IT service providers to deliver on time for key government agencies] can foster the idea that ‘it is better to do it in-house,'” explained Mr. Nikolopoulos. "Although attitudes are changing towards working with service providers as the benefits associated with outsourced services become better understood, widespread acceptance is still far away.”

Hospitals are constantly trying to reduce prices in an attempt to buy the latest technology with their limited budgets. The costs of implementation will vary significantly depending on factors such as the organization's size, the complexity of its information systems, the level to which its current processes are automated, and the integrity of its current infrastructure. Vendors can respond accordingly by offering competitive prices and flexible payment options.

"The ability of vendors to reduce costs for customers and subsequently make IT outsourcing solutions more attractive is one of the most important factors in this market,” concluded Mr. Nikolopoulos. "A ‘pay as you use' service, for example, can result in many smaller hospitals jumping on board, thereby increasing the installed base of loyal customers and setting the base for larger business opportunities in the future.”

Related Links:
Frost & Sullivan