Tag: Trump

What Pain will You Experience if the AHCA Bill Becomes Law? | Sherpas in Blue Shirts

  • Health insurance lost for 24 million U.S. consumers
  • Billions of dollars of care investment marginalized
  • Providers’ margins eroded by payers
  • And a five-year setback to the healthcare system

These are potential side effects if the U.S. House of Representatives- approved American Health Care Act (AHCA) bill becomes a law. Let’s look at the impact the law would have on the key constituencies.

Healthcare providers

With the most needy (the sick and the elderly) portion of the population left uninsured, the healthcare providers will once again be expected to foot a large part of their healthcare bills due to lack of coverage, non-payments, use of ER services, etc.

Healthcare consumers

With premium increases, credits/subsidies being based on age instead of income level, and states’ ability to change or waive pre-existing health condition coverage, a large percentage of older, lower income, and infirmed consumers would likely opt out of having coverage altogether. Young and healthy people would have less incentive to get insurance coverage.

Healthcare payers

The overall theme of the bill would result in a significant decline in volume of work managed by payers. That said, there would be numerous key operational implications for both private and government payers including:

  • Product development: Payers would end up having state specific plans, leading to increased administrative work around plan design and development activities. This would likely have a cascading effect on downstream processes (policy servicing, network and care management, and claims management) which are expected to become more complex and specialized.
  • Claims: Claims volume would likely dwindle, particularly among the old and ill, as a large percentage would have opted out of coverage.
  • Policy servicing: Payers would likely experience a significant uptick in queries from patients and providers, as uncertainty around topics such as eligibility, verification, and premium collection amplifies. However, demand for certain processes, such as HIX support, would likely be sluggish.
  • Care and network management: Care management programs would likely take a backseat, given their significant cost to enrollees and providers. Additionally, companies that had invested heavily in such programs could see decline in their ROI. Lower patient volumes might drive payers to tighten their provider network, leading to less work around network management activities.
  • Government (Medicaid): Reduced federal spend on Medicaid would likely push states towards a modular approach, and maybe even a shift towards a managed care construct.

With a decline in volume of work, it might not be surprising to see some of the larger payers insource certain processes.

The Healthcare IT and BPO service providers

A lesser volume of work across various value-chain segments would translate into lower revenue for third-party vendors. In fact, even though a law hasn’t yet been enacted, the healthcare business in some of the key players, such as Accenture and Cognizant, is already growing at a slower rate than their overall company growth rate. This impact could extend to the overall outsourcing industry. On the other hand, if states decided to exercise the power granted to them differently, service providers could also expect to see increase in the complexity of work around certain functions such as policy servicing and claims management.

Additionally, the ratified law might just be the impetus that mid-to-large buyers without GICs need to opt for bundled IT and BPO deals, which were traditionally a feature of mid-sized buyers.

Of course, the above-mentioned implications are for the bill in its current form. However, moderate Republican senators might well make massive changes to it, especially after the public outrage over certain parts of the bill.

It is going to be tough time of uncertainty for all stakeholders until a law – in whatever shape and form – is passed. In the meantime, payers and healthcare providers need to work closely with their respective service providers to ensure they stay afloat and come out on the right side of fence when the dust settles.
For a detailed analysis comparing the AHCA and ACA, please see our report titled: Acing Uncertainties in the Payer Market: The Trump Cards.

Trump Administration Policy Implications for the American Job Market to be Discussed in Everest Group Webinar | Press Release

Experts weigh in on how President Trump’s policies may impact the American economy, US talent models and companies with a global workforce

U.S. President Donald Trump has pledged to “Make America Great Again” by implementing policies to protect American jobs, but will the early actions and proposed policies of his administration have the desired impact? And how should business leaders in the U.S. and abroad prepare themselves for what could be a significant shift in the global landscape for jobs?

Everest Group—a consulting and research firm focused on strategic IT, business services and sourcing—will address these questions in a complimentary webinar offered this week. The webinar—“Make America Great Again: How could President Trump’s policies reshape the American job market?”—will be held on Wednesday, April 5, at 10 a.m. CDT.

***Register for the webinar here***

The one-hour event will delve into these issues:

  • US job losses and the state of the economy
  • Trends in the workforce driving the U.S. administration’s actions and its impact on U.S. competitiveness
  • Initiatives taken by leading countries and companies to enhance global competitiveness
  • Implications for global talent and business models in the near and medium term

The webinar will be hosted by Everest Group’s Marvin Newell, partner, and Hardik Chokshi, senior consultant.

Trump Dump | Sherpas in Blue Shirts

In our Everest Group forecast for the services industry earlier this year, we predicted deceleration from 3.2 to 2.8 percent in the broader services market and deceleration from 7.1 to 6.8 in in the Indian market. We see no reason to change that prediction of deceleration now. But something notable has happened since we made the prediction: a deceleration in Accenture’s earnings in the consulting and systems integration areas. This is puzzling at first glance but highly significant of a major trend.

We would have expected that we would increase our earlier industry forecast, given two factors:

  • Powerful new digital technologies now coming of age that are ready for adoption and should drive a wave of adoption and new spending
  • A buoyant US and global economy that has increased consumer spending, further driving discretionary services spend

However, we see negative trends due to the insecurity caused by what I refer to as the “Trump Dump” in America and by Brexit in the UK. The Trump Dump is the politically difficult environment causing companies’ reticence or unwillingness to commit to large projects with offshore labor. We’re consistently seeing projects delayed, postponed or cancelled. This puts companies in a bind because there simply isn’t sufficient domestic talent to drive large initiatives.

The US represents almost 50 percent of the global services market. We believe the Trump Dump will have a negative effect on the broader services industry, creating impacts beyond just the Indian segment of the market. Therefore, we believe there are significant reasons for caution in forecasting market growth.

Pharmaceutical Companies Can Help Support Trump’s Vision of Make America Great Again | Sherpas in Blue Shirts

When U.S. President Donald Trump met with the CEOs of a host of major pharmaceutical companies in late January 2017, one of his primary declarations was that drug makers should bring manufacturing and production, much of which is done in countries like India and China, back to the United States.

While moving FDA-certified production factories and establishing new supply chains back onshore is an extremely difficult, years-long ordeal, failing to take some type of proactive step to appease the Trump administration could open the door to potentially unfavorable actions for the major pharmaceutical companies. Think patent reforms, price lock-downs, consumer advertisement bans, and import/export tax mandates, all of which could wipe out the lucrative margins from U.S. consumers.

But there’s one easy step pharma companies can take to mollify the administration’s overarching agenda: start moving services jobs – such as IT, finance, and HR – back to U.S. turf.

Aprrox. 110k to 140k pharma industry services jobs have been offshored, with the majority residing in India

Trump and the pharma industry services jobs

If you look at the dollars, cents, and sense of doing so, it really is win-win. Consider:

  • Services jobs are the least likely to disrupt core business operations if brought back onshore
  • They’re comparatively easy to move, as they’re essentially labor-based and mostly centralized in offshore service centers
  • Doing so would not only provide gainful employment to more U.S. workers, but also signal a commitment to invest in the U.S. workforce and worker productivity
  • Pharma companies could avoid a negative impact to their bottom lines (i.e., a 50-70 percent labor arbitrage) if they effectively leverage digital technologies and capabilities to transform their delivery models as they repatriate the services.

Let’s take a deeper dive look at this last bullet point. True that India’s and other low-cost regions’ skilled workforce and cheaper labor made them attractive locations for offshoring pharmaceutical services jobs. This labor cost advantage has shielded pharma companies from having to take the painful and arduous path towards step-change improvements in workforce productivity, which requires significant investments and service redesigns. After all, why automate if you can get two or three offshore workers for the price of one U.S. worker?

But the world has changed. Digital service models are transforming how services are delivered and consumed. For example, when was the last time you filled out a deposit slip at a bank? Mobile deposits rule the day now. These transformations are happening across the services functions, and are opening the door to operational savings and productivity improvements.

Higher US labor costs can be mitigated by leveraging digital capabilities to transform the service functions being migrated back

Trump and the pharma industry services jobs

By moving and transforming their services, pharma companies wouldn’t bring back all of the jobs they initially offshored, but would create higher paying, higher skilled, and highly productive U.S. services jobs. And, this could be done relatively quickly and on a cost neutral basis with no impact to their bottom- or top-lines, while simultaneously leveraging digital technologies to transform their service delivery models.

It’s true that uncertainty abounds around what levers the Trump administration will pull to entice or force the pharmaceutical industry to align to its core tenant of creating U.S. jobs and “Making America Great Again.” But wait-and-see is a dicey game to play when it comes to the pharmaceutical industry’s most lucrative market.

Everest Group’s advice is to get ahead of the game – starting today. Take a fresh look at your company’s global talent management strategy and shared services construct to identify your degrees of freedom. Then start engaging your technology and services organizations to assess how you can bring some or all of these services jobs back to the U.S., and at the same time offset the higher labor costs with digital technologies and delivery models. It might just save your CEO from seeing an early morning Tweet from President Trump stating, “Horrible company!”

Learn more about the importance of bringing pharma jobs to the United States in Stephen Chen’s executive viewpoint, Will Big Pharma Heed the Call to Bring Jobs Back Home?

Breaking News: Everest Group’s Alternative Facts Research to Guide Global Sourcing Executives’ Next Moves | Sherpas in Blue Shirts

As disclosed in a pre-dawn Tweet this morning by President Trump, Everest Group has launched a new, alternative facts-based research service line. The goal of the “AlternaFacts” research team is to arm global sourcing executives with market and industry data, analyzed through a proprietary “interpretation lens,” that will enable them to creatively present their competitive capabilities, productivity, efficiency, and performance indicators to their C-suite executives. The AlternaFacts team is also open sourcing the company’s PEAK Matrix™, enabling service providers to position themselves wherever they choose, in whatever market they choose.

Trump Alternative Facts

Additionally…Happy April Fools Day! Of course, the above is all bunk. There is no such thing as alternative facts. A fact is, “A thing that is known or proved to be true,” or an “event, item of information, or state of affairs existing, observed, or known to have happened, and which is confirmed or validated to such an extent that it is considered ‘reality.’”

That said, separating fact from fiction (“Orwellian facts,” if you wish) in today’s exceedingly disrupted business environment is no easy task. Against the backdrop of globalization, automation, the Trump administration’s impending immigration reform and other game-changing policies, Brexit (it’s happening for certain), geopolitical issues in the Philippines, and other phenomena that characterize today’s uncertain times, it can be tempting to follow the bang of the most loudly played drum.

But when making critical decisions around service delivery models, location selection, digital, and workforce strategies, embracing the refrain of the most vociferous hype and buzz – rather than obtaining facts and insights – can lead to sourcing executives making significant mistakes. We’re talking about ones that result in multi-million dollar losses, market share erosion, or reputational damage. For example, they can place their enterprises at significant risk if they buy into service agreements priced for last-gen solution models, or make location investments in places optimized for yesterday’s talent needs.

To help enterprises cut through the hype and take proactive, informed steps amidst the uncertainty in today’s rapidly evolving landscape, Everest Group is hosting in May 2017 a two-day event entitled, New World [Dis] Order: Managing in Turbulent Markets. Sessions including “Globalization: Curve or Cliff?” and “Automation: Over-hyped or Under-appreciated?,” and speakers including Dr. Uri Dadush, former Director of International Trade for the World Trade Bank, will provide detailed, fact-based insights on how to thrive in the face of unparalleled disruption.

True that this event is being held at The Watergate Hotel in Washington, D.C. But there won’t be any scandal, attempted cover-ups, or clandestine agendas…just real facts! (And we promise not to tap into your smart phone!)

Are Rising Costs the Only Impact Immigration Reform Bills Will Have on the Services Industry? | Sherpas in Blue Shirts

When U.S. congressmen Darrel Issa and Scott Peters at the very beginning of 2017 proposed a bill that would increase H-1B visa holders’ wages to US$100,000, experts in the industry were positive that IT service providers would be able to manage it, as they were already bearing costs between US$75-85K. But less than a month later, U.S. Congressman Zoe Lofgren’s introduction of the “The High-Skilled Integrity and Fairness Act of 2017” – a bill that aims to double the minimum salaries for H-1B visa holders to minimum US$130,000 – eroded 5 percent of the Indian IT service providers’ market.

Although U.S. President Trump’s subsequent congressional speech talked about merit being the criteria for visa allotment – and many businesses rejoiced that he made no mention of minimum wage as the deciding factor – it’s fair to assume that the minimum wage might still end up near US$130,000 in a merit-based lottery system.

But cost is only one of the possible impacts of visa reforms on the parties directly and indirectly involved in the services industry. Let’s take a look.

Impacts on service providers

A landed resource might continue to be indispensable for projects when his or her role is primarily that of liaison with between the client’s business units and the provider’s offshore resources (due to time zone differences and established comfort levels) or if he or she was engaged for unique skills or insights. Landed resources serving as liaisons for business units could more easily be replaced by local resources.

H-1B visa reforms are expected to trigger a refocus on driving efficiencies through automation and digital process transformation. This will accelerate the transformation in service providers’ years’ standing talent acquisition operations and processes. The requirement for different skill sets, coupled with cannibalization of traditional revenue streams, paint a less than rosy picture on falling traditional revenues and increasing costs.

We might also see higher consolidation in the outsourcing industry, especially for mid-sized firms, as service providers may look at economies of scale and inorganic account expansion to counter slowing growth and keep cost of operations in check.

Impact on enterprises

U.S. companies might have to bear the brunt economic impact of the demand-supply mismatch. Enterprises today use H-1B resources for a variety of reasons, some to manage their GIC operations. A raise in the average wage will cause inflationary pressure on IT resource costs, restrict supply of talent, and create increased poaching of resources between companies. In other words, enterprises might be forced to hire landed resources at a cost much higher than the perceived value, or lose out on business efficiency and growth, thus creating a vicious cycle that the current administration hopes to break.

Impact on the education sector

The education sector might be most immediately impacted by any stringent visa reform going through. Enrollment of non-U.S. nationals in Master’s programs could plummet, given the likely challenge in finding jobs after graduation. This situation has already been observed in the U.K., where tight visa guidelines have compelled students to return home once they are done with their education. The rest of Europe, which has relatively less stringent visa requirements, might become a hot destination for the Indian student diaspora as demand for technical expertise increases significantly.

In India, it’s clear industry veterans and current leaders are questioning their own hiring tactics and the sustainability of the low cost model. While some have expressed that retraining their current force is difficult as people in senior and middle management are low quality, others have condemned the IT industry as a whole by accusing them of carteling to keep wages low.
This might not float well with new graduates, who increasingly look for jobs at start-ups entering the disruptive digital space. These new companies are offering higher wages and a culture more suited to millennials than do IT service providers.

While it will be wait and watch until we know what clauses in the proposed bill become law, it’s clear that any combination of the above and other impacts will force providers and enterprises to make some major decisions to remain at the top of their game.

Impacts of H-1B Visa Applications Suspension | Sherpas in Blue Shirts

There’s a new stake in the ground for H-1B visa reform. Beginning on April 3, 2017, the US Citizenship and Immigration Services (USCIS) will temporarily suspend premium processing for all H-1B visa petitions. Large U.S. tech firms stand out as firms that will suffer disruption from the suspension, but the impact will be felt most heavily among India’s service providers, all of which typically use the premium processing option.

The announcement stated the suspension may last for six months and impacts visa applications for FY18. A premium processing fee of $1,225 expedites the normal three to six months wait for visa decisions to 15 days. While there are several potential impacts, two rise above as the most significant threats to business in the near term:

  • The suspension is more likely to affect current visa extensions than new applicants. Thus, it could cause staffing gaps, especially since there is already a large backlog of applications for visa extensions.
  • It may hinder Indian providers’ ability to obtain the large number of new visas they desire, so they are likely to rev up their applications in coming months.

Based on the current political climate with an “America First” focus, one could assume that the Trump Administration is the proponent of the suspension, but the USCIS announcement didn’t specify a reason other than the current backlog. However, visa laws are outdated and H-1B visas have been a candidate for the reform “chopping block” for several years. So, what can we glean regarding the progress of visa reform from this recent move?

I believe the suspension could usher in an ideal opportunity to revise the visa program later. Undoubtedly, another outcome that will emerge is increased media attention on Indian service providers versus US jobs, as they historically heavily exploited the visa laws. As I recently blogged, Everest Group already is seeing evidence of businesses postponing or cancelling plans to outsource work to Indian service providers.

Finally, it’s clear that visa reform is still teetering as the existing proposals have not garnered enough compromise and support in Congress. What will be the Trump effect on moving the proposals forward? I’ve watched and blogged about this important issue since May 2013 and will continue monitoring the potential impacts of proposed visa reform.

IT Firms Breathe Easy as Trump Proposes Merit-Based Immigration | In the News

Peter Bendor-Samuel, a global technology researcher, said Trump is “holding out a small olive branch to immigrants” and will stick to his American first protectionist stance. “Trumps statements pertaining to a merit-based system for immigration provided hope to Indians seeking to emigrate to the US with advanced degrees. However, it is unlikely that it signals less hostility toward the current H1-B system.”

Trump has been “very clear that he is seeking to eliminate the ability of services firms to utilize H1-B and L1 visas as a bridge to taking US jobs off-shore”, said Bendor-Samuel, adding “this position is gaining considerable support from both political parties”.

Read more at the Business Standard

U.S. Domestic Locations for IT Services Delivery: Your Trump Card amidst H-1B Uncertainties | Sherpas in Blue Shirts

As part of President Donald Trump’s immigration reform efforts, the recently introduced legislation could make hiring H-1B visa holders significantly more expensive. The legislation calls for more than doubling the minimum salary of H-1B visa holders to $130,000.

The technology sector is the largest consumer of the visa. And about 70 percent of the 85,000 visas issued every year go to Indian workers employed by technology and outsourcing service providers to provide IT services to leading American enterprises.

Such a massive hike in the proposed minimum salary for H-1B visa holders is forcing enterprises and service providers alike to rethink their talent strategy from offshore to onshore. Factors such as adoption of agile methodology and regulatory requirements are also driving up the demand for onsite resources, and those will likely need to be sourced locally from within the U.S. as the landed resource model become challenged.

This increased focus on onshore resources has both enterprises and service providers alike considering the merits of potential U.S. locations. The landscape of IT services delivery from within the U.S. is complex, with more than 150 leverageable locations. The help simplify the view, Everest Group has classified delivery locations in the country into various tiers based on socio-economic status, maturity of IT services delivery, talent availability, and operating costs.

US Domestic Sourcing for IT Services

Deciding on the best location for U.S.-based IT services delivery must be based on a business case that considers multiple factors, and perhaps some trade-offs. For example, Tier-2 locations offer the twin advantage of moderate operating cost and breadth and depth of skills, but you might have difficulty attracting resources with extremely specialized skills to move from a Tier-1 city such as San Francisco to Dallas or Atlanta. And although Tier-3 and 4 locations are suitable for low-cost transactional IT services delivery, they may not be appropriate options if you need, or anticipate needing, more advanced skills.

US Domestic Sourcing for IT Services 2

While the proposed legislation hasn’t yet become law, turbulence and disruption of this potential magnitude demands significant research and pre-planning. As Benjamin Franklin, one of the founding fathers of the United States said, “By failing to prepare, you are preparing to fail.”
For more information on this topic, please read the following Everest Group reports.

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