Xerox, during its year-end financial presentation, announced a new plan to separate into two independent publicly traded companies, Document Technology and Business Process Outsourcing.
The Document Technology company, according to Xerox, will focus on document management and document outsourcing, while the Business Process Outsourcing (BPO) company will focus on helping clients improve the flow of work by leveraging Xerox’ expertise in managing transaction-intensive processes and applying technology to automate and simplify business processes.
The Document Technology company alone would have generated approximately US$11 billion in 2015 revenue. The BPO company would have generated approximately US$7 billion in 2015 revenue. Xerox notes more than 90 percent of the BPO revenue to be annuity based. Xerox states it is focused on attractive growth markets including transportation, healthcare, commercial and government services.
The leadership and names of the two companies will be determined as the separation process progresses. “I am confident that the extensive structural review we conducted over the last few months has produced the right path forward for our company,” said Ursula Burns, chairman and chief executive officer of Xerox. “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.”
Xerox also announced a new three-year strategic transformation program targeting a cumulative US$2.4 billion savings across all segments. The program is inclusive of ongoing activities and US$600 million of incremental transformation initiatives. The company expects US$700 million in annualized savings in 2016.