Trends Report

Xerox's Acquisition Of ACS Underscores A Converging Market

The Company Makes A Bold Services Play

October 6th, 2009
Christopher Andrews, VP, Research Product Management
Christopher Andrews VP, Research Product Management
Pascal Matzke, Vice President, Research Director
Pascal Matzke Vice President, Research Director
With contributors:
Craig Le Clair , Thomas Mendel, Ph.D. , Edward Radcliffe

Summary

On September 28, 2009, Xerox announced that it was purchasing the business process outsourcing (BPO) company Affiliated Computer Services (ACS), in a deal valued at approximately $6.4 billion. Coming just after Dell's acquisition of Perot Systems, this deal represents yet another significant change in the services landscape. Like Dell, Xerox is a company that is known for its product heritage and expertise — and this acquisition represents yet another sign of convergence and consolidation in the services market. Unlike the Dell/Perot deal, however, this deal substantially shifts the acquirer's business, expanding Xerox's business process capabilities and sending a clear signal about the strategic direction of the company. Although there are some near-term integration risks associated with the scale of the deal and the labor-intensive nature of ACS's business, the potential for long-term synergies is strong.

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