Outsourcing specialist Xchanging is planning to go public through a stock market flotation, predicted by analysts to be worth £1bn.

The move will put the firm into direct competition with rival services support company Capita Group.

Xchanging was founded three years ago by chief executive David Andrews.

Since then, Xchanging has clinched a £100m ten-year claims processing deal with the Lloyd's of London insurance market.

Under the agreement, Lloyd's and Xchanging formed a new jointly-owned company called Xchanging Claims Services.

It has also launched a venture called Ins-sure alongside Lloyd's and the International Underwriting Association (IUA) to provide back-office services to the London Market.

Xchanging is 70% owned by venture capitalist firm General Atlantic Partners and 30% by senior executives.

It is budgeting for turnover of £150m this year and expects to see that figure double to £300m by the end of 2003.

The company currently has a forward order book worth £1.6m.

Andrews said the company could float later this year or early 2003 and would make a decision by the end of the first quarter.