Atos targets US growth with billion-dollar Xerox acquisition

Atos is to spend over $1bn and take over the IT outsourcing operations of Xerox

Atos is to spend more than $1bn taking over the IT outsourcing operations of Xerox.

The French IT services supplier will triple its size in the US through the takeover and will get a large business process outsourcing and document outsourcing businesses.

Atos will add Xerox’s clients to its portfolio and try to sell more digital services to them.

Xerox’s IT outsourcing business generated $1.5bn sales in 2014. It has 9,800 information technology outsourcing in 45 countries, with 4,500 in the US and thousands more tin global delivery centres in countries such as India, the Philippines and Mexico.

Atos CEO Thierry Breton said expansion in the US is a part of a three-year strategic plan. 

“This transaction will allow us to strengthen our footprint in the US market which is an early adopter of high growth innovative technologies and to access a pool of talented and highly skilled technologists,” said Breton.

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

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.

This came at a time when massive IT giants HP and Dell were acquiring services capabilities. Dell acquired Perot Systems in 2009 and HP acquired EDS in 2008.

But in 2012, Xerox  restructured its European services business. It  let go of some senior and sales staff when it announced restructuring plans as part of a bid to save $18m to contribute to an overall Xerox target of reducing costs by hundreds of millions of dollars.

Professor Ilan Oshri, at the Centre for Global Sourcing and Services (CGSS) at the Loughborough University School of Business and Economics, said Xerox has been struggling with its IT services strategy.

“Atos is growing and becoming a more dominant player in the IT outsourcing market.”

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