Xerox has confirmed rumours that it is to split itself into two companies following a structural review. Both will be independent and will be publicly traded. Xerox has recognized that the two parts of its business differ in terms of their customers, capital structures and operating models.
The larger Document Technology, which accounted for $11 billion in revenue in 2015, will concentrate on document management and outsourcing.
The other half, rather grandly called the Business Process Outsourcing company, will deal mainly with managing transaction-intensive processes and automating business processes. This earned $7 billion last year, more than 90 percent of which is annuity based. Xerox says that it will target growing markets in transportation, healthcare, commercial and government services.
Ursula Burns, Xerox’s chair and chief executive officer, commented: “These two companies will be well-positioned to lead in their respective rapidly evolving markets and capitalize on the opportunities that now exist to expand margins and increase market share.”
Xerox has yet to choose the names or the leadership teams for either company but has said that it will complete the separation by the end of this year.
Meanwhile Xerox is also to implement a three-year strategic transformation program that aims to save $2.4 billion across all segments. This includes some $600m worth of initiatives that are already underway. Xerox hopes to realise $700m in annualized savings this year.
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