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January 17, 2000

Aetna Expands Offshore Outsourcing
Deal with Indian company will save money and cut development time

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etna U.S. Healthcare, a subsidiary of Aetna Inc., will expand its relationship with offshore outsourcer Infosys Technologies Ltd. as part of an effort to realign the company's operations and shift its IT focus from Y2K to E-business.

The decision to commission additional Infosys consultants to help build Aetna's E-business initiatives comes as the Hartford, Conn., company last week said it was restructuring into two primary businesses--Global Health and Global Financial Services.

Last year, Aetna contracted 50 of the Bangalore, India, outsourcer's IT employees for Y2K work. With that work successfully completed, Aetna plans to have 300 Infosys employees working by year's end to help it accelerate the development of health-care and financial-services offerings on the Web. Aetna expects to trim $12 million from its IT budget for 2000 as part of this effort, CIO John Brighton says.

Aetna turned to the application development and Internet consulting firm because the cost of doing business in the United States is seven times higher than in India, says Bob Austrian, a research analyst with Banc of America Securities. Plus, time-zone differences mean work is done around the clock. As a result, Aetna will save about 40% on IT costs for its Y2K and E-business projects, Brighton says.

Aetna retains control of its system design, but uses Infosys to program, test, and deliver components of its Web initiatives, Brighton says. "Following the offshore model was an alternative to hiring inexperienced college graduates or enticing seasoned IT veterans out of retirement."

During the second quarter, Aetna will create a separate offering of online financial and retirement benefit services to complement its growing line of "E-health" initiatives. Already completed are DocFind, which lets members research affiliated physicians online; InteliHealth, an online medical library; EZpay, an online claim-submission service that shortens payment cycles from 60 days to 15; and EZenroll for plan sponsors. By the end of 2001, Aetna will let members communicate with health-care professionals in real time and will offer online doctor referrals.

Offshore relationships require solid communications, says PricewaterhouseCoopers partner Jim Porter. Brighton says Aetna works with a U.S. Infosys office, which conveys information to India.

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