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Xerox splits as it looks towards nimbler future

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Ben McCabe

Written on 01/02/2016 | Posted 1 year 5 months 21 days ago

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The new businesses will disentangle over the course of the next twelve months The new businesses will disentangle over the course of the next twelve months

It's a strategy that seems to be working for HP and now Xerox is in on the act. The multi-national technology company has made the decision to break its operations into two smaller public-facing entities as it looks to better meet the specific needs of the industries it serves.

The move sees Xerox create a 'document technology' business, which the manufacturer values at $11 billion (£7.8bn), and a business process outsourcing company worth $7 billion (£4.9bn).  By splitting these entities, the company hopes to save up to $2.4 billion (£1.7bn) in costs thanks to a more simple structure, while allowing it to tailor its products and services better for the distinct markets that it currently serves.

The document technology side of the business, which includes its printer hardware, workflow software and managed print services, will largely continue on its current path, supported by 'selective investments' in areas identified as growth markets. The business process outsourcing venture will incorporate Xerox's activities in transportation, healthcare, accounting and pre-paid card services, among other areas. The company believes that there is significant scope for improving margins with a more streamlined set-up.

"Today Xerox is taking further affirmative steps to drive shareholder value by announcing it will separate into two strong, independent, publicly traded companies," confirms Ursula Burns, chairman and chief executive officer of Xerox. "These two businesses will be well positioned to lead in their respective rapidly evolving markets and capitalise on the opportunities that now exist to expand margins and increase market share.

“I am confident that the extensive structural review we conducted over the last few months has produced the right path forward for our company. We will now position the companies for success and execute our plan to separate them in the shortest possible timeframe while continuing to focus on achieving our 2016 goals."

The split is expected to occur towards the end of 2016, with the names of the two new entities yet to be confirmed.

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