Highlight Report

HGS divests its healthcare business to make space to accelerate growth

August 24, 2021

HGS divested its healthcare business, which is approximately 53% of its total book of business to a diversified Asian private equity entity late July. The divesture means that HGS will focus its attention on its consumer experience (CX) and digital services and make bold investments with the $1.2 Billion proceeds it will gain from the divesture.

HGS healthcare has the making of a hidden gem to address complex healthcare challenges

The healthcare services portfolio at HGS is a mix of technologies, analytics, and BPO. A portfolio that was strengthened with strategic acquisitions of Colibrium, a health plan focused integrated software solution, AxisPoint, a digital health entity with a whole person care focus, and revenue cycle management assets from Deloitte.

HGS also attracted talent that brought both healthcare industry expertise and emerging technology experience, particularly around smart analytics. This allowed them to expand into areas such as population health management and develop insights from social determinants of health to craft proprietary measurements like the “Impactability” index that shines a light on gaps of care and propensity to engage for the geriatric cohorts.

The solutioning approach is fairly standard, consulting-led, and discovery-driven to understand the issues at hand before developing solutions. This approach has allowed HGS to focus on outcomes through bundled solutions, avoiding the BPO trap of transactional services.

Divestiture translates in loss of a differentiator but increases focus

Divesting the healthcare business takes away one of its key differentiators from its contact center pure-play peers: true industry-specific capabilities. This has been an element that HFS has encouraged HGS to replicate in its other verticals. However, HGS may be opting to forgo this industry-focused strategy to double down on its digital CX strategy. This move is likely aimed at continued expansion on its significant investments in “Smart Solutions” and Cognitive Cloud Contact center which we’ve followed closely.

The Bottom Line: This is a bold decision to walk away from an exciting and growing segment of the market with proceeds from a high-value asset to invest in other growth areas core to its horizontal capabilities.

To make the best of this decision, HGS needs to carefully streamline its strategy in line with client needs. They will need to ensure consistent articulation of their message and value proposition, as  “Digital CX” is a crowded space where it’s very hard to differentiate.  Until now, HGS’ advantage has been the flexible and nimble approach that clients appreciate — now, its “traditional” CX business and its digital service line need to become tightly integrated for clients to take advantage of both sides of the house.

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