XANSA, the IT services group, swung back into the black at the half-year stage, after focusing on expansion of its Indian outsourcing business.

The company, which provides back office outsourcing to clients such as BT and O2, said its restructuring programme, which had seen it sell off its unprofitable US unit and exit businesses in Europe and Asia, was now complete.

Alistair Cox, chief executive, said the company’s focus on helping clients to outsource more of their operations had begun to pay off. “We are both extending our services with existing clients and winning new clients,” he said. “Our restructuring is complete and we can now focus on growing our business in the UK marketplace.”

The company reported a pre-tax profit of £4.9 million for the six months to the end of October, compared with a £12.4 million loss in the same period last year. Mr Cox said there had been a shift in business, with the contribution from its Indian outsourcing operation rising to 13 per cent from 11 per cent in the year to April, as revenues from the operations increased by 38 per cent to £25.2 million.

The contribution from public sector contracts increased to 11 per cent of turnover, against 9 per cent in the year to April 2004. He cautioned that the private sector continued to show “at best” very modest growth, with little hope of improvement in the second-half. But he had a more bullish outlook on opportunities in the public sector, underpinned by the Government’s modernisation and efficiency agenda.

The company recently announced a potentially lucrative contract to service NHS trusts, which analysts believe could be worth more than £1 billion over the next ten years.

Group turnover fell from £225.7 million to £189.5 million, but was up by 4.3 per cent in its continuing businesses.

Mr Cox said group margins had improved from 4.0 per cent at the end of the first half last year to 5.5 per cent, and raised the prospect of further improvement into “high single figures”. The company will pay an unchanged interim dividend of 1.08p per share.