Xerox's Acquisition Of ACS Underscores A Converging Market

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.