Charting a New Course

DQI Bureau
New Update

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.