Technology major Computer Sciences Corporation (CSC) recently announced the expansion of its business process service centers for insurance, annuities and pensions into new geographic regions. With this development, the company has extended its reach into Hong Kong, Kuala Lumpur and Malaysia by offering its services in different local languages.
The company already boasts a significant presence in the insurance segment and is seeking to further strengthen its grip in the segment. The new expansion is consistent with the company’s strategy of expanding in Asia and CSC will accelerate delivery to market and process agility to multi-national and domestic insurers in the Asia-Pacific region.
To lead its Asian operation, the company has recently appointed Josy Fung, who will be primarily responsible for supervising its service delivery operation. Fung has prior experience as a key official in Manulife Financial. We believe the company is making considerable efforts to enhance its income from the region.
Moreover, in an effort to further improve its presence in the insurance segment, the company recently entered into an agreement with Microsoft Corp (MSFT) to extend Integral, one of CSC’s global insurance administration software suites, to Microsoft Windows Server 2008 R2 and SQL Server 2008 R2. The combined solution is expected to offer a new platform alternative to insurance companies with comprehensive insurance administration capabilities at an attractive total cost of ownership.
We believe that the company is looking for a suitable alternative to support its revenue stream, as orders from government clients appear to be slowing down. Insurance as a segment offers a huge market and will provide substantial business opportunities to its clients.
CSC reported decent first quarter 2012 results. However, we are apprehensive about the intense competition in the IT and cloud computing space from both small and big players such as Accenture (ACN) and Hewlett-Packard Company (HPQ).
Moreover, with government orders looking sluggish and the NHS (National Health Services) realization getting pushed to future quarters, things look difficult for the company. Moreover, the demand for the company’s products in Europe is not encouraging for the upcoming quarters.
The company holds a Zacks #4 Rank, implying a short-term Sell rating.
