By AltG Innovation Centre On Behalf Of Poornima Vardhan And Taponeel Mukherjee
As the world experiences a shift towards longer life expectancies and an ageing population, the importance of the healthcare staffing market is reaching paramount levels. With the right corporate strategies and capital allocations, the Indian healthcare staffing industry holds the potential to give birth to $100 billion behemoths, much like the Indian IT giants TCS, Infosys, and WIPRO from the 1990s.
Understanding Healthcare Staffing
Healthcare staffing involves recruiting highly skilled healthcare professionals such as doctors, nurses, therapists, pharmacists, technicians, and support staff. This staffing can be done in-house by healthcare organisations or outsourced to third-party service providers. As healthcare companies expand and populations age, the demand for skilled healthcare professionals becomes increasingly critical.
Global Demand and Demographics
The primary driver of global demand for healthcare staffing is the demographic shift towards an ageing population. India, as the world's most populous country, is uniquely positioned to capitalise on this opportunity, with 65% of its population under 35. The export of healthcare services to developed countries facing a demographic transition characterised by declining birth rates and a growing ageing population presents a significant opportunity for Indian healthcare staffing firms.
The World Health Organization estimates that by 2050, the proportion of the world's population aged 60 and above will nearly double from 12% to 22%. By 2030, one in six people globally will be 60 or over, creating a compelling need for quality healthcare services. Indian healthcare staffing companies can cater to this growing global demand.
The Current State of the Industry
The global healthcare staffing market was valued at USD 36.9 billion in 2022 and is expected to grow at a 6.93% CAGR from 2023 to 2030. However, the industry remains largely fragmented, resembling the early days of the software service industry in the 1990s before the IT boom. This suggests India's healthcare staffing export industry could follow a similar trajectory to the IT export sector.
The Enormous Opportunity
The potential of the healthcare staffing market is intricately tied to the broader healthcare industry. The demand for healthcare professionals is highest in countries with substantial ageing populations, such as Japan, Italy, Germany, and France. Even countries with robust healthcare infrastructure face the risk of shortages in medical staff. For instance, Japan could experience a shortage of nearly one million medical staff by 2040.
Several trends support a robust outlook for the healthcare staffing market, including the increasing number of healthcare facilities, government investments in healthcare, rising demand for home healthcare services, the adoption of telemedicine, and the enduring impact of the COVID-19 pandemic, which emphasised the importance of well-equipped and well-staffed healthcare institutions.
Value Creation in the Healthcare Staffing Industry
To generate value in the healthcare staffing industry and create the next Infosys-like giants, a Roll-Up strategy can be employed. This involves consolidating smaller businesses into large platforms that efficiently supply skilled healthcare workers worldwide. Value creation can be achieved through several steps:
Growth Arbitrage: Centralising sales efforts and expanding into new countries to service larger geographies while allocating capital to high-growth opportunities.
Capital Structure Arbitrage: Making formal credit accessible to constituent brands to improve working capital cycles and margins.
Multiple Arbitrage: Enhancing the "quality of earnings" to achieve higher valuation multiples.
Cost Arbitrage: Rationalizing costs and achieving economies of scale.
The Indian healthcare staffing industry presents a unique opportunity to tap into the skilled workforce and demographic dividend to supply healthcare professionals globally. Investors can roll up smaller businesses into mega-platforms and transform a high-growth, cash-flow-generating industry into future industry giants. The healthcare staffing industry has the potential to follow in the footsteps of the Indian IT revolution, creating a new generation of $100 billion companies. Just as 1991 was a turning point for IT exports, 2023 appears to be a transformative year for healthcare staffing, heralding a new era of Indian industry success.
Disclaimer: In the article "What is India’s Next Infosys?" above - Any views, comments or communication (above or in the past) should not be construed to be investment advice by Alternative Growth (hereafter referred to as “AltG”) in any form whatsoever. AltG does not make an offer to sell or solicit to buy any securities.