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Yet another outsourcing wave!

Hospitals in US and UK are outsourcing lab and diagnostic tests to India as it costs 80% less to conduct them here.

india Updated: Jun 26, 2006 14:07 IST

India is on the verge of another outsourcing wave: high-end laboratory and diagnostic testing!

Indian labs offer a comprehensive test menu -- over 1,500 tests under one roof. A number of hospitals in the US and UK are outsourcing laboratory and diagnostic tests to India as it costs about 70 to 80 per cent less to conduct them in New Delhi.

At the moment, this is generally limited to highly-specialised tests but experts say outsourcing of laboratory testing and diagnostic services is set to become big business in India.

According to industry estimates, the Indian diagnostics and pathology laboratory business is around 864 million dollar and is growing at a rate of 20 per cent annually.

Those in the business say big Indian lab companies are either in talks with or already are partnering with hospital chains overseas for long-term outsourcing contracts.

Some Indian lab companies have secured contracts with a few hospitals from the Middle East.

"Diagnostics and lab testing is certainly the next area of thrust. Already hospitals from the US and UK have started shorlisting diagnostic centres here. Pathology labs are also being automated to receive the bulk of tests," says Dr Bharat Aggarwal of Diwan Chand Imaging Research Centre.

"While in the case of diagnostics, X-rays and other procedures are done there and the reports by experts are written here and sent back, in the case of lab tests, the photomicrographs are electronically sent here and the doctors send back the results," says Dr Aggarwal noting the big Indian diagnostic centres and labs are technologically at par with those in USA or Europe.

While the industry has around 20,000 laboratories, only a few prominent ones have any international accreditation that instills confidence about their quality among foreign hospital chains, those in the business say.

Infact, there are just two labs here which have all the accreditions required to get outsourcing work from anywhere in the world," says Dr O P Manchanda, COO, Lal Path Labs in New Delhi.

There are also both liability and logistics issues which need to be settled before India can become a hub for outsourcing laboratory lests, says Dr Manchanda.

It is logistics related business, here the sample has to move from one destination to another.

To import blood samples for testing,laboratory testing companies have to acquire a licence from the Drug Controller General of India, in addition to approval from the Director General of Foreign Trade.

The government thus needs to bring in some guidelines and licencing regime so that the issue can be sorted out, he says noting "the liability issues too remain unclear... There is lack of clarity on how to resolve them."

For the outsourcing boom to happen, however, there is urgent need to market our products globally.

"The government has to start speaking globally about diagnostics and lab work outsourcing in the same way as information technology," says Dr Manchanda.

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