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Posted by Craig Le Clair on September 28, 2009
Xerox may soon own ACS. A great move if you ask me - for tactical and strategic reasons. XGS -the services arm - has been making some "toe in the water" moves over the last few years towards BPO in markets such as E-Discovery, Mortgage Processing, and growing organically core processes such as invoice processing and customer on boarding. These made sense in the quest for higher value conversations with customers but did not have the juice to really transform the company into a services-led player of the 21st century or position the company to expand into cloud and SaaS offerings. This deal has the power to do just that -adding solutions, project and change management skills as well as a mature labor arbitrage infrastructure.
On a tactical level, adding higher-value apps. protects commoditization of some of the core document services such as capture and print whcih more and more just spin out of higher-order contarcts. And speaking of capture, XGS would become the largest outsourced capture provider. Of all the ITO/BPO players, none did as much for that inbound channel as ACS. We estimate about 1B of ACS's revenue could be classified as in-bound capture. But that's just part of this story. A strong ITO channel like ACS will help push XGS's already fast growing Managed Print Services business. These ITO players see MFPs as a mere extension of their other ITO services -just another server on the network - and can easily fold in these services under contracts that may outsource data centers, desk tops, and networks. This approach -ITO-led MPS- is not lost on the HP IPG division that is building pipeline through EDS ITO deals. All in all, you have an agressive move from a company not known for them in recent memory.
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