Indian IT Vendors Cry Foul

Competition among domestic IT firms and their counterparts in India for a piece of the U.S. health-information market -- estimated at $50 billion in the next few years -- is generating transnational animosity.

U.S. hospitals converting to electronic health need someone to digitize vast numbers of paper health records, yet they are reluctant to outsource the work to a country that has become adept at "handling outsourced work for pharmaceutical companies and insurers," wrote the Wall Street Journal, which reported on the standoff this week.

Recent U.S. policies affecting India's outsourcing have raised charges in that country of protectionism.

"If Indian outsourcing companies aren't successful at getting health-care business, skeptics in India could perceive that as another slight to an industry whose relationship with the U.S. is becoming increasingly tense," concluded the article's authors.

Lower costs associated with using Indian vendors have resulted in the country's developing a huge IT outsourcing industry, but hospitals in the United States say it is more efficient to use vendors that can work onsite. Hospitals say they worry about the legality of shipping sensitive health information overseas.

George Conklin, chief information officer for Christus Health in Irving, Texas, told the newspaper that he uses offshore vendors only for systems that do not contain sensitive personal information. "As soon as it leaves the confines of the U.S., it's not subject to the same rigorous laws as we are," he was quoted as saying.

Indian vendors, saying they employ the same level of security as U.S. vendors, blame the growing U.S. sensitivity to offshoring for their inability to secure health IT contracts.

"Though it is never said overtly, it is much harder for Indian suppliers to get these kinds of contracts than their American counterparts," Nishant Verma, vice president of the Indian IT outsourcing firm Tholons Inc., told the newspaper.