Everest Group Report Finds Life Sciences Companies Fuel 50 Percent Increase in Application Outsourcing Transactions Over Four-year Span

United States and Pharmaceuticals Segment Lead AO Adoption Activity

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Jimit Arora, vice president, Everest Group

Jimit Arora, vice president, Everest Group

Driven by continued business challenges such as top-line erosion due to patent expiration, cost pressures, weak innovation pipelines, growth of personalized medicine, and regulatory compliance, AO in life sciences is expected to continue to grow.

Dallas, TX (PRWEB) October 02, 2012

The US$25 billion healthcare IT Outsourcing (ITO) market witnessed a notable acceleration of Application Outsourcing (AO) in the life sciences sector over the last four years, registering a CAGR of more than 50 percent from 2008 to 2011 – and the market is projected to carry this momentum into 2013. IT Application Outsourcing (AO) in the Life Sciences Industry – Annual Report 2012, published by Everest Group, an advisory and research firm on global services, examines the factors driving the increased outsourcing activity in the life sciences sector as well as significant trends in the AO market.

“Life sciences, which includes pharmaceuticals, medical devices and biotechnology, represents a quarter of ITO transaction activity in the healthcare vertical, and AO is included in the scope in more than 60 percent of all healthcare ITO transactions ,” said Jimit Arora, vice president, Everest Group. “Driven by continued business challenges such as top-line erosion due to patent expiration, cost pressures, weak innovation pipelines, growth of personalized medicine, and regulatory compliance, we expect to see AO in the life sciences sector continue to grow.”

The report reveals the following key trends for AO adoption in the life sciences sector:

  • Large transactions, each valued at over US$25 million in total contract value (TCV), represent 50 percent of life sciences AO contracts signed over the past four years.
  • North America, led by the United States, and the pharmaceutical segment dominate AO adoption.
  • While India remains the preferred delivery location for life sciences AO, China, Malaysia and Latin America are emerging as newer low-cost locations.
  • More than US$3 billion in life sciences AO contracts are due for renewal between 2013 and 2018.
  • AO in medical devices and biotechnology segments expected to gain share.

Five key themes are driving IT services demand in the global life sciences market:

  • Compliance with regulatory reform
  • Consumerization
  • Portfolio diversification
  • Convergence for personalized medicine
  • Cost and efficiency management

The annual report is part of Everest Group’s new Healthcare Outsourcing research program launched in response to the market need for fact-based insights specific to sub-segments of healthcare – payers, providers and life sciences. A companion study, IT Applications Outsourcing (AO) in the Life Sciences Industry – Service Provider Landscape, will be published later this year. It will provide a comprehensive assessment and map service providers on the Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix.

The Service Provider Landscape portion of this study analyzes 14 AO service providers classified as global majors, offshore majors and regional/tier-2 players: Accenture, Ci&T, Cognizant, Dell Services, Fujitsu, HCL, Hexaware Technologies, IBM, Infosys, Mahindra Satyam, Mphasis, Tata Consultancy Services, Unisys and Wipro.

“Global majors lead other service provider groups in terms of average life sciences AO revenues whereas offshore majors lead in headcount,” said Arora. “The global majors are more successful in winning high-value, transformational AO contracts, resulting in higher average revenues despite having fewer employees than the major offshore providers.”

For more information about the report,IT Application Outsourcing (AO) in the Life Sciences Industry – Annual Report 2012, or to inquire about other research services, please visit research.everestgrp.com, email info(at)everestgrp(dot)com or call +1-214-451-3110.

About Everest Group
Everest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With a fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and delivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting, original research and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing models, technologies and management approaches. Established in 1991, Everest Group serves users of global services, providers of services, country organizations and private equity firms, in six continents across all industry categories. For more information, please visit http://www.everestgrp.com and research.everestgrp.com.