International IT services group Xansa has posted underlying annual profits at the top end of forecasts.
The company - which employs about 300 people in the West Midlands in offices in Birmingham, Coventry and Solihull - said it would be ramping up its Indian operations to widen margins and win new clients.
Xansa's Indian operations employed 2,815 staff or about 43 per cent of its total workforce at the end of the last financial year, and the company said it was expanding capacity in its centres there to raise that to 4,000 people.
"Leveraging India is a key reason we believe why we have been able to win more work and attract some of the new clients. It is also a highermargin business than our onshore business, and you can see why we are pushing that model," said chief executive Alistair Cox.
Mr Cox added that many of Xansa's private-sector clients in the UK were pushing for offshore services to drive down costs. Xansa, which does work ranging from developing software to processing financial transactions out of its three centres in Noida, Chennai and Pune, is not alone in turning to India.
Many UK, European and US companies have set up offshore operations there to take advantage of low costs and the vast pool of skilled, English-speaking workers.
Xansa, which counts Government departments and firms such as BT, Barclays and Boots as some of its large customers, said its increasing reliance on offshore resources had helped raise its operating margin to 5.7 per cent for the year to April 30 from 4.6 per cent a year earlier.
Xansa's underlying pre-tax profit for the year slipped to £18.3 million from £18.7 million a year ago. Underlying revenues rose 3.5 per cent to £376.4 million.
On a headline basis, Xansa swung to a pre-tax profit of £10.8 million compared with a £29 million loss a year earlier, appearing to draw a line under the tough times it endured in the economic downturn.
The company kept its annual dividend steady at 3.24 pence amid concerns its rising indebtedness would put future payouts at risk. Net borrowings rose to £16.1 million from £7 million, which the company blamed on exceptionals.
"Maintaining the level of dividend should indicate the level of confidence in our business going forward," Mr Cox said, adding that the company still plans to rebuild its dividend cover to around two times earnings.
Xansa said the UK's private-sector business was expected to grow broadly in line with gross domestic product over the next year and it expected revenues there to remain broadly flat, masking the underlying growth in activity and volumes.