An 'in line' update from Xchanging for the period since the end of the first half (see Xchanging passes its nadir), shows the business process services provider is on track to meet its FY12 expectations.
It said the business retains a healthy financial position with a strong balance sheet, and has made progress winning contracts with new and existing customers, such as a further technology contract with Gatwick airport in September for telephony services.
It also launched two new business process platforms, which we see being more relevant to Xchanging’s core BPS ‘knitting’. The first is a pilot for Xchanging’s new settlement services offering, Netsett, which has been modelled on a service Xchanging provides for the London insurance market. The second is its well-publicised next generation insurance and reinsurance platform Xuber. We are encouraged by Xuber, but are more cautious about its plans to target the property and casualty (P&C) insurance market in the US.
Xchanging is making strides on multiple fronts. But we’re just becoming a little concerned about the focus. This week it made the curious acquisition of Italian securities and asset management software and services provider AR Enterprise to bolster its loss-making Italian business Kedrios (see Xchanging acquisition from troubled Italian business). And now we see it is winning telephony contracts and looking to break into the highly competitive US P&C market space once again. Hot Views readers will recall that Xchanging halved the size of its US operations last year when it sold its troubled US workers’ compensation claims business (see here). We’d hate to see Xchanging repeating the same mistakes.