In a marked departure from its historic area of expertise, printer and photocopier manufacturer Xerox has announced its intention to acquire business process outsourcing (BPO) and IT services company Affiliated Computer Services for $6.4 billion.
The deal is drawing comparisons with Dell’s acquisition offer for IT services company Perot Systems, made last week. In both cases, once-iconic hardware manufacturers are buying into the services industry to counteract plummeting sales.
In its most recent financial quarter, Xerox’s revenue fell by 18% year-on-year to $3.7 billion. The steepest decline was in sales of hardware, supplies and peripherals – down 24% to $1.6 billion – but its services division, which includes support, managed print services and rentals, saw a 12% decline to $1.9 billion.
ACS, meanwhile, enjoyed the IT services sector’s relative buoyancy in its most recent quarter, and grew revenues 6% to $1.7 billion. Xerox’s offer is roughly equivalent to one year’s revenue at the company.
Listed among ACS’s service offerings is document and data management, suggesting there will be some cross-selling opportunities for Xerox. What use it can make of ACS’s customer services, IT integration and human capital management practices is less clear, however.