French outsourcing firm Atos has agreed to acquire the IT outsourcing unit of Xerox for just over $1 billion in a deal that widens its operation significantly in the Americas. The deal increases Atos’ size by three fold in the US, besides adding several blue chip clients to its portfolio.
With estimated 2014 revenue of $1.5 billion, Xerox’s ITO business employs approximately 9,800 ITO employees in 45 countries, with 4,500 in the U.S. and more than 3,800 in global delivery countries such as India, the Philippines and Mexico.
All employees serving at Xerox IT outsourcing unit will soon join Atos. “we are all excited to welcome soon our 9,800 new colleagues,” said Thierry Breton, Chairman and CEO of Atos.
Service segment accounts for 55 percent of Xerox revenue, but the Norwalk, Conn-based company says it now wants to focus on BPO and document outsourcing services.
“This transaction is another step in our ongoing portfolio management strategy and increases our focus on those areas where we can deliver the most value and expertise to our clients,” said Ursula Burns, Xerox’s chairman and CEO.
Selling bulkier photocopiers was originally the major business for Xerox, but in 2010, it acquired Affiliated Computer Systems for a $6.4 billion and became a major player in business services.
But Xerox has certainly surprised analysts by selling its ITO unit. When it bought Consilience Software and Smart Data and ISG Holdings earlier this year, analysts thought that Xerox was digging in for a long fight in the IT outsourcing industry.
This deal turns Atos into an IT service provider for Xerox. Both firms have long had a working relationship. For example, Atos has relied on Xerox for managed print, human resource and financial services.
The deal certainly benefits Atos because, over the past years, the French firm has built up a strong services portfolio and expertise in cloud, Big Data, cyber-security, and in high power computing.
“This transaction will allow us to strengthen our footprint in the U.S. market and to access a pool of talented and highly skilled technologists,” Breton added.
The deal is expected to close in the first half of 2015.