Is Xerox's European services plan in tatters and is ACS to it what EDS is to HP?

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Xerox's plans to grow its services business in Europe could be in tatters. A source told me it is about to lay off lots of people.

This is the Xerox that acquired US IT and business process services giant Affiliated Computer Services (ACS) for billions of dollars in 2009.

The firm gave Xerox a services footprint in over 100 countries from 500 locations.

Speaking at the time Xerox CEO Ursula Burns said the deal was "a game-changer for Xerox". "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," she said. Xerox wanted to use its brand to grow ACS's business outside the US with a strong focus on Europe.

But according to a source close with good knowledge of the company it is about to retrench in Europe and lay off lots of people.

Xerox like HP, with its EDS acquisition, and Dell, with its Perot Systems acquisition is a hardware giant attempting to expand into services. We all know that HP has halved EDS's market value since its take-over in 2008.

Do hardware firms and services suppliers have incompatible DNA?

Tell me what you think.
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3 Comments

Interesting question: "Do hardware firms and services suppliers have incompatible DNA?"

Based on the above and other stories you cite, it seems they do, and not just in the hardware and services sector. There is incompatible DNA elsewhere: look at the acquisitions by outsourcing companies of the Big Four consultancies, e.g. Capgemini/EY Consulting, IBM/PwC and what happened to the consulting businesses afterwards.

So the answer may be "yes" when hardware and services businesses start out separately and merge or are acquired, especially when the hardware company is the acquirer.

But it may be "no" or only "maybe" when the hardware and services businesses are within the same company, so the DNA is changed from within, e.g. the way Gerstner taught the IBM elephant to dance.

It may also be a feature of "old technology" companies generally being less adaptable than "new technology" companies, e.g. Amazon being able to morph - OK, from within - from being an online e-tailer to becoming a credible cloud provider.

Needs some more thought.

Karl, Speaking on behalf of Xerox, I wanted to clear up some of the points in your article:

I’d have to disagree with your premise of “incompatible DNA.” Our differentiated mix gives Xerox strength to help clients simplify business challenges. Here’s an example: a few weeks ago we demonstrated how Xerox innovation is being applied to services from ACS (http://xrx.sm/Dmp) in industries like transportation and healthcare. These are new ways we’re helping our clients and strengthening our annuity-based business model.

There’s no question many companies are facing headwinds in Europe, but we’re managing it with focus, discipline and sound investments to tap into high-growth areas, most recently acquiring customer care providers WDS and Unamic.

Our restructuring, the details of which will be announced in November, will make us even more efficient and responsive to the needs of our customers and changing business.

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This page contains a single entry by Karl Flinders published on October 31, 2012 12:36 PM.

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