You won't find many companies listed in the dictionary as a verb. Xerox, once self-styled as "The Document Company," has grown from offering multifunction document machines to now also being an outsourcer of business processes (BPO), such as customer care and claims filing operations, and IT functions, such as infrastructure, cloud computing, and application services. Its document equipment is used not only in the office but also in mass-printing production settings. It serves customers in both the private and public sector. Major subsidiaries include office equipment and services provider Global Imaging Systems.
Xerox has two main segments, which essentially divide about 90% of sales: services (BPO and IT and document outsourcing) and technology (products, supplies, and related service and financing). The $6.4 billion acquisition of Affiliated Computer Services (ACS) helped catapult Xerox's outsourcing business in 2010, overtaking the technology side of the business in 2011 to become Xerox's largest segment; it grew from $3.5 billion to $10 billion to account for nearly half of sales. The company's other, smaller business lines include paper, wide-format systems, GIS network integration, and electronic presentation systems; together they make up less than 10% of sales.
BPO constitutes 55% of services, with document outsourcing taking a third, and IT outsourcing bringing in 12%. BPO addresses common enterprise functions such as HR and tech support, as well as offering support for financial services, healthcare, transportation, retail, travel, and insurance, and more. IT outsourcing focuses on mainframe server environments, network, and desktop, but also includes other functions such as remote infrastructure management and utility computing, among others. Document outsourcing offers managed print services and communication and marketing services. Xerox's technology segment is made up of mid-range products (nearly 60% of the segment), small and midsized business offerings (about 20%), and its high-end portfolio for graphic, communications, and large clients (about 20%).
Nearly 85% of Xerox's sales come from non-equipment, "annuity" sources: recurring income, such as contracted services, equipment maintenance, supplies, and financing. That revenue grew 6% for 2011 and has been fueled in part by the company's shift to color systems, which expend consumables at a faster rate than black-and-white devices. (Color-capable equipment and annuity sales rose 5% in 2011.) It's also helped by the growth of Xerox's document management consulting business, which monitors and manages device usage for clients and migrates businesses to multifunction machines, and by the continuing popularity of outsourcing basic internal processes that allow businesses to focus on their core expertise.
The shift from equipment to services can be seen in its 2011 financial results. The services segment grew 12% in 2011, while technology slipped 1% even with a favorable 2-percentage point impact from currency. Overall equipment sales remained flat. The service, outsourcing, and rentals portion of annuity revenues grew 8%, while supplies, paper, and other sales fell 3%. Still, part of that slide was due to macroeconomic factors: primarily, the struggling global economy (particularly in Europe, which accounts for 25% of sales) and the natural disaster in Japan.
While Xerox is as dedicated as ever to remaining the leading global document company, it is embracing the digital and outsourcing age by making its services segment the company's lead horse. With much of its business coming from the US, and most of the rest from Europe, Xerox sees international business as a key growth opportunity. Finally, though black-and-white systems traditionally accounted for the majority of Xerox's equipment sales, the company is looking to the "high-value" options of color (which has seen overall single-digit growth for the past two years, including a 12% increase in equipment sales in 2010) and customized content. With nearly 75% of Xerox pages still being done in black-and-white, the company sees color as a big opportunity for growth. The company also counts on R&D to help keep it competitive. It spent more than $720 million (about 3% of revenue) on R&D in 2011.
Xerox serves more than 160 countries, with about two-thirds of sales coming from the US, and 25% from Europe. It holds a 25% stake in its joint venture with FUJIFILM, Fuji Xerox, which serves the Pacific Rim with document processing products.
Xerox markets its products and services by geography, sales channel type, and line of business. It complements a network of third-party sales channels, such as resellers and systems integrators, with a large internal global sales team. Customers have included Boeing, Ingersoll-Rand, Fiat, KLM Royal Dutch Airlines, City of Los Angeles, and Aspen Marketing Services.
Among Xerox's acquisitions have been the purchase in 2012 of e-discovery technology provider Lateral Data for $30 million. Also that year Xerox strengthened its customer care portfolio by purchasing UK-based WDS, which specializes in collecting, analyzing, and consulting on wireless customer interactions to help providers find and solve experience issues in real-time.
In 2011 it picked up digital document products distributor Concept Group and print software and consulting services provider NewField IT as part of an effort to expand its presence in the UK, particularly in the small and medium-sized business market. It expanded in the Benelux region that year with the acquisition of customer care provider Unamic/HCN. Xerox didn't ignore its home turf either, bringing in The Breakaway Group (cloud-based electronic medical record adoption) and Education and Sales Marketing, LLC (student financial and enrollment management) that year, both headquartered in Colorado. – kevesebb