Is there a recurring theme here? US-based giants with faltering commodity business models from yesteryear, making very late plays to get into the IT-BPO services business?
While I could see some synergies between Dell and Perot, this one's even tougher to fathom, unless Xerox has further plans to marry ACS with a stellar IT services acquisition.
ACS was one of the early darlings of BPO, and was right at the top of the competitive tree in the early 2000's whenever a large Finance & Accounting, HR or call center deal was up for grabs. It would always give Accenture and IBM a run for their money in BPO pursuits, and had a compeling culture and engagement methodology for many of the old world BPO engagements (i.e. a lot of lift and shift and staff re-badging).
Sadly, ACS has rather fallen away in recent times, and has struggled to cope with the aggressive entry of the Indian-centric global competitors into the BPO space. The new generation of global services providers are bringing passion and combined IT-BPO prowess into the mix, in addition to global sourcing models that are driving down the price-points.
Xerox, on the other hand, has been eyeing broader business services for a while, and I can see why they'd find part of the ACS portfolio attractive – a broader client-base, great presence in healthcare, government, hi-tech and consumer business, a strong BPO brand and global delivery presence. ACS also has a strong IT services business, but not on the same scale as the top tier.
The real challenge for this combined entity, is to cope with the new throng of competitors in this space: Cognizant, Genpact, Infosys, TCS et al., and not solely the incumbents such as Accenture, Capgemini and IBM. The combined Xerox-ACS business will have a short-term potential to consolidate a commanding position in back-office BPO areas such as document management, call center, payroll, benefits admin and accounts payable.
However, clients today are spoiled for choice with other service providers which can offer the same services at lower cost. Xerox also needs to make a quick move to push a utility delivery model, based on common processes and standards, with compeling industry-alignment. Continuing to push old-world BPO, where the customer shifts existing processes with limited transformation, is not a recipe for success.
My take? If this combined entity were to merge with a strong IT services provider and develop a coherent IT-BPO strategy, then we really have something to talk about. Funnily enough, if you combined the new Xerox with the new Dell, then you'd be looking at a company with a lot of future potential…