top of page

Indian Healthcare Staffing Exports: Creating $100 Billion Giants


AltGs Principals, Poornima Vardhan and Taponeel Mukherjee, discussing rollup investment opportunities in India

By AltG Research on behalf of Poornima Vardhan & Taponeel Mukherjee


As the world moves towards longer longevity, the importance of the healthcare staffing market is paramount. With the right corporate strategies and capital allocations, investors can back potential USD 100 billion behemoths and 100X the investments made.


What is Healthcare Staffing, and Why is It Critical?

Healthcare staffing involves recruiting healthcare personnel - doctors, nurses, therapists, pharmacists, technicians, and other support staff.


There are two ways to go about healthcare staffing - in-house (the healthcare organisation does it internally) or outsourcing it to a third-party service provider. Typically as healthcare companies scale, accessing third-party service providers becomes essential. Additionally, as the population ages, caregivers assume great importance.


Healthcare staff are typically specialists and highly skilled. Moreover, healthcare staffing is critical as shortages in healthcare personnel can lead to real-life consequences.


Why is There Global Demand?

The most important driver is demographics in a rapidly ageing world.


India, the world's most populous country, enjoys a demographic dividend opportunity, with 65% of the population under 35.


The real immediate potential pertains to the export of healthcare services. Developed countries are already staring at a period of population ageing, with a ballooning share of the number of people aged 60 years and above on the back of a period of demographic transition with falling birth rates.


Between 2015 and 2050, the World Health Organisation estimates that the proportion of the world's 60+ population will nearly double from 12% to 22%. Meanwhile, by 2030, 1 in 6 people in the world will be aged 60 years or over. This presents an excellent opportunity for Indian healthcare staffing firms to cater to the growing need for quality healthcare abroad.


What Does the Industry Look Like Today?

The global healthcare staffing market size was valued at USD 36.9 billion in 2022 and is expected to grow at a 6.93% CAGR from 2023 to 2030.


The industry is largely fragmented, and in more ways than one, it looks like the software service industry in the 1990s before the IT boom. We expect India's healthcare staffing export industry to follow a similar trajectory to IT exports in the 1990s.



How Big is this Opportunity?

Invariably, the healthcare staffing market's prospects are intricately tied to those of the broader healthcare market - and the Total Addressable Market is massive.


The demand will invariably be highest in countries such as Japan, Italy, Germany, France, etc., where the share of those above 65 is already over 20% of the population. Moreover, the market prospects are reliably strong even in countries with robust existing health infrastructures and impressive healthcare records. Japan, for example, risks suffering a shortage of nearly 1 million medical staff by 2040.


Other trends also point to a robust market outlook across countries: an increasing number of healthcare facilities, growing government investments in healthcare, rising demand for home healthcare services, the emerging popularity of tech solutions, including telemedicine (wherein healthcare professionals can provide care remotely), and the lingering legacy of the COVID-19 pandemic, which highlighted the indispensability of well-equipped and well-staffed healthcare institutions.


Therefore, the scope of the healthcare staffing market is massive. Multiple $100 billion companies will be built here in this space that will 100x the investments made. TCS, Infosys and WIPRO are the benchmarks that took a cottage industry and built giants in their sector. We can expect the same trends to be replicated in healthcare staffing.


How to Generate Value from This Opportunity?

Value creation will be via Roll-Ups to create large platforms of staffing that can help India provide skilled healthcare workers to the world efficiently and swiftly. Such a strategy is optimal for a sector as fragmented as healthcare staffing, where most players are small, regional and niche-specific. Platforms that can collate various sub-services under the same rolled-up platform stand to reap handsome rewards.


Value creation via a Roll-Up Plus Platform Play will involve the following steps:

  1. Growth Arbitrage through Growth Engineering by Centralising sales efforts while pushing into newer countries to service larger geographies and allocating capital to high-growth opportunities.

  2. Capital Structure Arbitrage through Capital Structure Engineering through making formal credit accessible to constituent brands that would otherwise have found it difficult to access structured credit. This improves the venture's working capital cycle and margins.

  3. Multiple Arbitrage via Multiple re-rating through improving "quality of earnings".

  4. Cost Arbitrage via cost rationalisation and economies of scale.


India can benefit greatly by tapping into its skilled workforce and demographic dividend to supply skilled workers worldwide. Investors must start rolling up smaller businesses into mega-platforms and transform a high-growth, cash flow-generating burgeoning industry into future industry giants.


The bottom line is that a new generation of USD 100 billion companies is on the rise: what 1991 was for IT exports, 2023 is bound to be for healthcare staffing. By all accounts, a repeat of the Indian software/revolution is on the cards.


Comments


bottom of page