Charting a New Course

When Dell acquired Perot it surprised the industry but a closer look at
the synergies brought to fore the opportunity Dell would derive out of
Perot’s customers to whom it can sell its hardware and also
will gain expertise on the business process and IT services industry.
Even before the industry could fully analyze the implications of
Dell-Perot acquisition, another mega deal -Xerox acquiring Affiliated
Computer Services (ACS) for $ 6.4 billion signals the beginning of
divergent players joining hands and ramping up business by cross
selling their domain expertise.  Reflecting on the deal
Xerox’s CEO Ursula M.Burns observed, “By combining
Xerox's strengths in document technology with ACS's expertise in
managing and automating work processes, we're creating a new class of
solution provider.”



This consolidation also makes the industry all the more competitive
with both the companies getting domain breadth and they are shedding
their pure play niche status. The Xerox deal with ACS is one of the
biggest after HP acquired EDS last year. Players like Dell and Xerox
will challenge HP and IBM on a more level playing stage with same kind
of product and service depth due to these acquisitions. It is indeed a
strategic gamble. For instance if we look at ACS, it operates in the
BPO and IT services space and with revenues of in excess of $ 6.5
billion and growing at about 6%. If we look 2009 alone ACS had garnered
new business deals worth more than $1 billion. And what it means is
huge potential business for Xerox for its core document management and
print solutions and Xerox already has its flourishing document
outsourcing business which now will see significant wins-pitching on
ACS’ clientele.



ACS too will benefit from Xerox’s document management
technologies and solutions.  Analysts believe that
ACS’ solution capabilities will get a significant boost due
to Xerox’s expertise- for instance ACS derives a significant
slice of its revenues from document management services- but in terms
of document management capabilities it adopts a highly manual centric
approach. Here by virtue of this deal ACS can automate all the manual
document management processes and its clients will derive a significant
value and a big leap in the service quality. Xerox on the other hand
will come out of it’s ‘just a document management
company’ to a more diversified player with a portfolio
cutting across hardware, software and IT and BPO services. With this
acquisition Xerox becomes a $22 billion giant with a 128,000 employees
spread across the world. Initially ACS will operate as an independent
entity with branding ‘a Xerox company. The year 2010 would be
significant year for Xerox as it needs to manage the synergies and
translate that into significant new revenues streams.