In what appears to be an effort to increase its focus on healthcare, Infosys will transfer the healthcare business of its US-based, wholly-owned subsidiary Infosys Public Services to itself for a consideration of $100 million .
In its latest annual report, Infosys said it has created a new business unit called HILife to provide services to healthcare, insurance and life sciences businesses. The new unit will presumably combine its existing healthcare and life sciences business, which accounts for about 7% of its overall revenue of $8.7 billion, with the healthcare business of Infosys Public Services.
The thrust in healthcare comes at a time when industry rivals like Cognizant and Wipro are aggressively focusing on the space, with Obamacare opening up outsourcing opportunities that aims to brings millions of people under the healthcare insurance fold in the US. Both healthcare providers and payers as well as life sciences customers, including pharmaceutical, biotech and medical device companies, are outsourcing work to IT service providers.
Almost a quarter of Cognizant’s revenue comes from healthcare, while for Wipro, that figure is close to 12%, both significantly higher than for Infosys. Last year, Cognizant acquired TriZetto, a healthcare IT software and solutions provider, for $2.7 billion to strengthen its healthcare capabilities. Wipro’s healthcare business is expected to touch $1 billion this fiscal.
In his note to shareholders in the annual report, Infosys CEO Vishal Sikka described the company’s full year performance as “average”. “There were hard fought battles in a difficult climate, one in which clients’ expectations are changing, new emerging technologies are rapidly coming to market and where the landscape of services companies has become vastly more competitive,” Sikka said. He said the company faced internal challenges that lagged growth and a string of senior level exits put pressure on its business and performance.
India’s second-largest IT services firm’s growth lagged those of its peers last year. Revenue grew 7.1%, just about meeting the lower end of its guidance of 7%-9%.
“When we look at Infosys today, we can see that it has been a year of great transition for the company…We are learning to work in a new environment and in new ways and it has been a difficult learning experience. But with learning comes the promise of renewing ourselves and the opportunity to pursue entirely new horizons,” Sikka said.