Bridging the Gap: Unlocking Profit Optimization with Offshored Solutions

In today’s fast-paced business world, leaders are increasingly shifting focus from profit maximization to profit optimization. This is particularly relevant in asset-heavy industries like pharmaceuticals and biotechnology, where operational costs often weigh heavily on the bottom line. A huge opportunity exists for US/EU-based organizations to reduce costs and improve efficiency by leveraging offshore solutions for off-site roles.

Countries like India, known as the "pharmacy of the world," offer a vast pool of highly skilled manpower. Professionals with domain-specific expertise in business development, regulatory affairs, pharmacovigilance, GxP compliance, project management, and procurement etc. are readily available. Moreover, India's workforce extends beyond these core pharmaceutical functions to include back-office roles like accounts, finance, IT, HR and further. India’s communication proficiency, service-oriented mindset, and the availability of a large talent pool make it an attractive offshoring destination for life sciences organizations.

Lessons from the IT Industry

Over the past two decades, India has emerged as a global hub for IT outsourcing. Of the top 10 global IT outsourcing companies, at least four (TCS, Infosys, Wipro, HCL) originate from India. Many others, such as Accenture, Cognizant, and Capgemini, have established substantial operations in the country. However, the life sciences industry has yet to witness this scale of offshoring, despite the growing trend of Global Capability Centers (GCCs) being set up by leading companies like Lonza, IQVIA, Teva, Abbott, AstraZeneca, GSK, Lilly, ThermoFisher and others.

Why Not Life Sciences?

The potential for offshoring in life sciences is enormous, especially for small to midsized companies in the US and EU. These companies can achieve substantial savings and process efficiencies by adopting KPI-driven models for offshore teams. A clear communication framework, goal alignment, and effective management oversight are essential to bridge cultural differences and ensure seamless integration between onshore and offshore teams.

A Call to Action for Private Equity & Venture Capital Firms

Private equity and venture capital firms focusing on healthcare should take note. By setting up centralized back-office solutions in India, these firms can help their portfolio companies achieve profit optimization. This strategy can yield net profit improvements of 5% to 7%, as illustrated in the table below:

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By adopting this offshoring model, companies can achieve significant cost reductions while maintaining operational excellence.

The IT industry has shown the way. Isn’t it time for the life sciences industry to follow suit?