ACS (Affiliated Computer Services), one of the Top 20 Training Outsourcing companies in the world, was today acquired by Xerox, the global leader in document management solutions. Xerox agreed to purchase ACS for an estimated $6.4B in cash and stock. The deal creates a $22B global enterprise for document technology and business process management. The transaction is expected to be closed in the first quarter of 2010, at which time ACS will become Xerox's core BPO services company. The learning services business for ACS was acquired in 2007 from Ernst & Young, operating under the name Intellinex. Notable clients of ACS Learning includes Ernst & Young and Hertz.
In my opinion, this deal may be one of the most important acquisitions ever to affect the training outsourcing market. Why? First because it is the largest deal ever involving a company where a training outsourcing services provider was a core component of the business being acquired. Other training outsourcing services companies have been a part of acquisitions, but never this large and on the acquired side.
Secondly, because it clearly demonstrates that the growing business process outsourcing market is strong and vibrant, and a strategic business for larger product and service based companies to have in their portfolio. This is evidenced by recent acquisitions by Dell of Perot Systems, and HP's acquisition of EDS. Although learning was not a core part of these businesses acquired, learning has been important components of Dell and HP's ongoing strategy.
It is unclear how a document services company might integrate a BPO services company into their service mix. My expectation is we will not see a strong integration of services. What I do think we will see is an independently functioning business unit operating under the ownership of the mother company, working hard to leverage the brands and key client relationships for growth in each units business.
I had the opportunity to speak with Richard Klingshirn, the Executive Managing Director of ACS Learning to discuss how the acquisition by Xerox will help them be more competitive in the training outsourcing market. One of the most important points Mr. Klingshirn states is "ACS's ability to better leverage our global resources for our global clients, including those of Xerox."
In the highly competitive business process outsourcing market, a suppliers ability to reduce the risks for their clients in managed services is critical. I firmly believe that working with ACS, a Xerox Company, is a very safe bet for buyers of training outsourcing services. They are well capitalized, have global resources, a talented resource pool as evidenced by the training they provide for highly respected Ernst & Young consultants, and a broad suite of learning services capabilities.
