Xerox copy the outsourcing trend
If there was ever any doubt that the outsourcing market was still fantastically buoyant even though many firms and industries are struggling, events of the past few days will have blown any misconceptions away. The need to reduce costs and lower expenditure is hitting every firm and industry hard so the opportunity to utilize outsourcing benefits whilst trimming your own unnecessary expenditure is an attractive approach to take and Xerox are a firm who have been in need of improving their financial outlook.
Like many firms, Xerox have definitely been feeling the squeeze of late and this was best shown when the company released the forecast for their first quarter earnings. There was a reduction of a whopping 85 per cent as Xerox felt the full brunt of the financial crisis engulfing many industries and firms. As Xerox are particularly affected by the behaviour of offices, the global slowdown has caused a big drop off in the amount of sales in this market, harming the revenue levels whilst dramatically reducing the opportunity for the firm to reduce their costs.
This announcement comes hot on the heels of the decision last year to remove 3,000 jobs from the companies’ worldwide payroll, which stood at around 57,000 people. There will no doubt be some concern that the jobs lost in that cull will now be accounted for in this latest venture but Xerox have stressed that this new deal with HCL is in no way related to the round of redundancies.
The deal is based on the fact that Xerox will outsource their data center services work to HCL Technologies and will pay $100 million over a six year period. An investment of this size and scale at the moment indicates the benefits that Xerox are expecting to make from the deal and of the value that it is worth to the organization. HCL Technologies are expected to play a large role in the handling of Xerox’s disaster recovery work and will also provide support and consolidation for the firms’ data centers that are based in Europe and North America.
The deal with HCL Technologies will further enhance the reputation of the Indian firm who have become known as one of the major information and technology service firms and providers in the entire region. The benefits of using Indian outsourcing materials and staff has been recognised by many firms in the past few years but the scope of this deal should remove all doubt that the benefits offered through working with the region can be of massive benefit to many firms.
With many observers still predicting that the economic outlook is showing no signs of picking up, it is inevitable that firms are looking to offset any difficulties and improve their current financial status. In the aftermath of this outsourcing venture becoming known, the share of Xerox rose, which indicated the benefit that should arise from this decision. With outsourcing remaining a viable and healthy option to gain experience and expertise at an attractive rate, do not be surprised if many rival firms copy Xerox and look to outsource as much of their own data center needs as possible.
