Outsourcing’s Odd Couple: Xerox & ACS, One Year Post-Merger

Will ACS eventually become Xerox’s only outsourcing provider?

McDermott: I make Kevin compete for his incremental business here. We have every intent to move more services to ACS and we have already committed ourselves to replacing EDS with ACS. EDS is now part of HP, so that relationship has become a little awkward for us.

 

 

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There are some areas–new systems within our SAP/Oracle footprint–where our relationships with other parties will remain important to us. But ACS has good capabilities in development in .NET, Java and other Internet technologies and my intent is to use that a lot more.

The transition of IT services from HP to ACS will not be complete until the end of the year. How are you handling that uncomfortable situation, where you’re biggest supplier became your biggest competitor when HP acquired EDS?

McDermott: This is the one and only plug I will give to our competitors [at HP]: the local guys on the ground have delivered with the highest level of professionalism. A few of those professionals, as happens in all [outsourcing] transitions, will join the Xerox group. The people at the absolute top will move on to other opportunities. They managed this transition in a way that you’d typically only see in a ramp-up of a relationship, not a ramp down.

It’s one thing to run an internally facing IT shop, but another thing to serve external clients’ distinct IT outsourcing needs, too. Is Xerox assuming a thought leadership role with ACS’s CIO clients?

Kyser: I’ve only been in my role as COO for ITO for 120 days–I was the CFO as we were going through the transaction–so I have a view of not just ITO but the BPO business as well. We were excited about the transaction because of the innovation and R&D that Xerox has inside of their business. That’s something we could not afford prior to this. We really struggled with innovation, spending our nights doing R&D.

Now we’re exposing ACS clients to that R&D through what we call “dream sessions.” We ask clients to tell us what keeps them up at night, and with the significant capabilities that exist inside Xerox and ACS, we figure out how we can create solutions.

How have you applied Xerox’s product innovation processes to services?

Kyser: We sell services, but we use software and products to deliver them. Our services are buoyed by the proprietary technology behind them. We have seen some early successes around imaging and photo capture that have really been eye opening. It’s totally different from what we’ve focused on in past, and we’re getting good early reviews.

McDermott: Take an area common both to Xeros pre-ACS and ACS pre-Xerox–the question of how you take information embedded in paper documents and put it in digital form. Xerox has extraordinary capabilities in this area. We not only can do key-wording, but we can parse that document, summarize it, put metadata headers on it, do automatic routing. A BPO health records offering from ACS [for example] would see enormous benefits from the translation of physical documents to electronic documents.