Expansion expected in Healthcare BPO

BY Matt Atkins

According to a new report published by MarketsandMarkets, the global healthcare business process outsourcing (BPO) market is expected to see rapid growth in the next five years, doubling in size by 2018. Presently valued at an estimated $92.3bn, the market is poised to grow at a CAGR of 10.8 percent to reach approximately $188.9bn before the decade is out.

BPO is the contracting of specific business tasks such as payroll to third party services. Usually, BPO is implemented as a means of outsourcing  tasks that a company requires but does not depend upon to maintain its position in the marketplace.

The healthcare BPO market is spread across the payer, provider and pharmaceutical sectors, of which pharmaceuticals has the largest share, accounting for close to 80 percent of the market in 2013. Cost reduction is the main driver for outsourcing business functions which include HR services, finance and accounts, claims processing, medical billing and contract research. Healthcare reforms introduced by the Obama administration are also driving the market.

Healthcare BPO is divided into source and destination geographies. The US accounts for the largest share of the market, followed by Europe. The most preferred destination is India, which has the advantage of a high number of healthcare professionals, affordable cost of living, a large patient pool, and decreased time and costs for recruitment.

Overall, the healthcare BPO market is highly fragmented with many small players competing for their share, particularly in India and China, where many entrepreneurs have entered the market. The major players include Accenture, GeBBS Healthcare, Omega Healthcare, Parexel and Boehringer Ingelheim.

In recent years, the market has come under scrutiny by regulatory bodies, and regulatory change in key regions such as the US and Europe is expected to result in increased requirements for payer and provider outsourcing services.

Press Release: Healthcare BPO Market worth $188,856.5 Million by 2018

Embrace the cloud to stay competitive, says PwC

BY Matt Atkins

According to a new PwC report, modern day financial institutions face increasing demands on two fronts: the need to consolidate their data centres and increase business agility.

After the burst of M&A activity which followed the 2008 financial collapse, organisations have been left with an overlapping mix of data centre assets which must now be consolidated into a more cohesive whole. In addition, in a continually changing business environment, institutions are feeling the pressure to innovate and embrace new technology.

In light of these challenges, says the report, CIOs are increasingly turning to cloud technology to transform their technology infrastructure and deliver consistent service to their global customers. Of the respondents to PwC's survey, 71 percent said they would invest more in cloud technology – up 18 percent on the previous year. The adoption of private clouds offers institutions a chance to address their data consolidation needs, in turn boosting IT agility, according to PwC.

Embracing cloud technology offers numerous rewards. Using the cloud, leading institutions are able to: adapt more rapidly when entering new markets; improve IT services to business units, enabling units to better serve their customers; and improve the consistency of service to customers worldwide, resulting in greater customer satisfaction and loyalty. The cloud also allows institutions to cope with the changing demands of software development lifecycles and technology change programs.

Security concerns remain a major consideration in cloud adoption. By its very nature, the cloud forces IT services to pay closer attention to potential risks in the strategic planning and implementation of data centres. However, while 46 percent of respondents reported their organisation uses cloud services, only 18 percent of financial organisations included provisions for the cloud in their security profile.

Moving to the cloud is a complex process, says PwC, and cloud strategy should be developed with the input of top management across the company. But when an institution strategically implements a private cloud solution, it can help the overall objectives of the organisation, as well as its IT goals.

Report: FS viewpoint: Clouds in the Forecast

Tech M&A on the rise

The technology deal market has displayed tremendous performance over recent years. In terms of total transaction size, the M&A market as a whole increased 4.1 percent in 2012-213 – but the technology M&A sub-sector increased 30.5 percent during the same period. Technology deals overtook the energy, mining and utilities sector for the first time since 2006 and accounted for 23 percent of global M&A activity in 2013. Increasingly, technology firms are using M&A to move into new areas and transactions are being driven by growing demands for reliable and secure mobile infrastructure.

FW spoke to Susan Blanco at Houlihan Lokey, Nick Abrahams, at Norton Rose Fulbright Australia and James Klein at Penningtons Manches LLP about M&A in the tech sector.

TalkingPoint: M&A in the tech sector: outlook for 2014

PE hungry for energy assets

The energy sector is a key target for private equity (PE) , which has proved a major source of investment since the economic downturn. Almost half of executives expect to invest in energy during the next year, with a particular interest in oil and gas assets. North America remains a key region, although other geographies are expected to benefit from private investment. East and West Africa, and Latin America have befitted as the emerging markets have developed, and unconventional exploration is boosting opportunities in Europe and Asia.

FW spoke to Stefanie Fleischmann at Beowulf Energy LLC, Andy Brogan at EY and Douglas Nordlinger at Skadden, Arps, Slate, Meagher & Flom LLP about opportunities for PE presented by the energy sector.

TalkingPoint: Private equity in the energy sector

Icahn faces insider trading claims

BY Matt Atkins

Renowned activist investor Carl Icahn has come under investigation for insider trading along with two others. According to reports, the investigation began three years ago and is the latest to emerge from an ongoing crackdown on insider trading by US authorities.

The investigation reportedly centres on suspicious trades in consumer products company Clorox Co by golfer Phil Mickelson and high-profile sports better William Walters. The trades came shortly before Mr Icahn made a bid to take over the company in 2011. Mr Icahn had accumulated a 9.1 percent stake in Clorox in February 2011. In July, he made an offer which valued the company at above $10bn and did wonders for its stock price.

Federal prosecutors in Manhattan are handling the inquiry in conjunction with the FBI and the SEC. The investigation appears to be looking at whether Icahn leaked details of his failed takeover bid to Mr Walters – who Mr Icahn knows – which were subsequently passed on to Mr Mickelson.

Investigators are also looking into trades made by Mr Mickelson and Mr Walters in relation to Dean Foods Co, just before the company announced quarterly results in 2012. These trades appear unconnected to Mr Icahn.

Even supposing Mr Icahn had leaked information about his plans regarding Clorox, there is confusion to whether he would have violated the law. Insider trading regulations prohibit trading based on material, non-public information obtained from someone who breached a fiduciary or confidentiality duty by disclosing it. Since he was not a board member at Clorox, Mr Icahn owed no duty to its shareholders. It is possible that Mr Icahn owed a confidentiality duty to his own investors, though this legal argument may be a stretch, given he owned more that 90 percent of Icahn Enterprises at the time.

Mr Icahn denies all allegations against him. He told Reuters that he was unaware of any investigation and said that his firm always followed the law. He acknowledged a business relationship with Walters but said that he did not know Mickelson personally. "I am very proud of my 50-year unblemished record and have never given out insider information," he said.

News: Icahn, Mickelson are investigated in US insider trading probe